Oct. 30, 2003 -- "Nobody has our mandate," says Alberto Vilar, manager of Amerindo Technology Fund/D (ATCHX). Unlike other tech fund managers, Vilar seeks out emerging technology companies just after they become public and sticks with them for four to five years. "Our job is to find the next Microsoft Corp. (MSFT) or the next eBay Inc. (EBAY)," he says.
Vilar has had quite a ride pursuing this goal. His fund rode the tech boom, surging 248.9% in 1999, versus a 121.6% gain for the average tech fund. Conversely, it was hit hard in the recent bear market, plunging 64.8% in 2000, and 50.8% in 2001. Tech funds fell 32.5% in 2000, and 34.9% in 2001.
Now, Vilar says he's back on track, with his fund soaring 119.6% for the one-year period through September, compared with a 61.9% rise for its tech fund peers. The Amerindo Fund was the sixth best-performing sector fund for the one-year period through last month. The aggressive approach, however, has been stomach churning for investors, with the fund coming in at the bottom or top of its extremely volatile category.
Asked about these ups and downs, Vilar says: "There is no question this is a homerun business." The manager also believes the recent bear market was a "perfect storm" stemming from an unusually large number of negative events, including corporate malfeasance, lower capital spending, and the telecom bust.
"We are overwhelmed and delighted that we survived," says Vilar. Like many tech survivors from the recent recession, Vilar says his firm restructured and reorganized, although he says he didn't do much downsizing.
What hasn't changed is Vilar's focus on future winners in the tech and biotech spaces. Currently, the fund is focusing on 'consumer-centric' Internet, digital, applications software, and biotechnology. "To say that tech doesn't make eminent sense, flies in the face of reason," says Vilar, who points to technology's central role in boosting economic productivity.
Vilar's consumer-centric plays include eBay, Yahoo Inc. (YHOO) and Amazon.com Inc. (AMZN). Seeing further upside, he notes that his consumer-centric holdings are the only fund subsector that "roared" this year. Vilar also sees signs of life in the IPO market. The manager is currently eyeing a few companies poised to go public, including CancerVax Corp., a biotech firm.
Because there have been few IPOs recently, Vilar has been focusing on more established companies, so his largest holdings are InterActiveCorp. (IACI), eBay, Amazon, and Yahoo. He feels these "survivors became lean and mean" by working through the Internet shake-out.
Vilar's strong opinions show up in his fund's focused strategy of holding just 20 to 25 stocks. Although the fund's turnover is a moderate 50%, Vilar currently has a 30% cash position as he waits for the IPO market to open up. "You won't find someone who is so focused" on the emerging tech space, Vilar says. But given the fund's high expenses and extreme volatility, investors may want to carefully consider their appetite for risk.