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May 02, 2002 at 08:00 PM
Quick Take: John Enlund, who leads the five managers that oversee Country Growth Fund (CTYGX), looks for companies whose revenues and profits increase over time. Enlund, however, wants to buy their stocks at attractive prices. He also favors companies that grow by introducing new products or entering new markets, rather than through acquisitions.
The fund gained 0.2% through the first quarter this year, while the average large-cap value fund was up 2%. But Country Growth’s record over the long term is better. It returned 13.2% per year on average for the ten years ended in March, while its peers were up 12%.
The Full Interview
What does a money manager do if his outlook for the market is pessimistic?
If you’re John Enlund, you hoard cash, which can serve as a cushion if stocks fall. The $175-million Country Growth Fund he helps run currently has about 12% of its assets in greenbacks compared to a more typical 3% to 5%.
“We’re having difficulty finding companies we want to own,” Enlund said. “But I’m sure that’s going to turn around at some point in the future, and I’m going to have some powder dry to be able to buy those names.”
When Enlund invests, he looks for growing companies whose stocks seem reasonably priced. He hunts for those whose top and bottom lines are expanding at least 5%, and that he thinks are likely to sustain that pace over time.
He would rather see revenues generated from within, from the introduction of new products, for example. Internal growth is preferable because it “tends to be more sustainable over the long term” than acquisitions, he said.
Ideally, Enlund wants stocks that are trading at a discount to their own history and the market. The companies in the fund’s portfolio trade for about 20.2 times projected 2002 earnings, compared to about 29 times this year’s earnings for the Standard & Poor’s 500-stock Index.
Enlund and the fund’s four other managers shop among companies with capitalizations of $5 billion or more, although they own some slightly smaller ones as well.
A recent addition to the portfolio is Newmont Mining (NEM), which Enlund likes because it is the largest gold producer in the world. In addition, the Denver-based company will do “very, very well” if gold prices keep heading up, he said. Enlund initially bought the stock late last year and added more in February for about $24 per share. It has been trading for about $28 lately.
