Podcast Center
Video Center
Webcasts
Resource Center
Events
May 30, 2002 at 08:00 PM
Most mutual fund managers look at growth rates along with some measure of value to guide them in making buys and sells.
Growth fund managers focus more on a company’s growth rate. Value managers look more at valuation measures, such as P-E ratios.
Todd McCallister, 42, says he runs the Heritage Series Trust:MidCap Stock Fund/A (HMCAX) differently. He doesn’t pay much attention to either. And he doesn’t like being pigeonholed in one category or the other.
That’s not the way you buy a business,” said McCallister. If you were going to buy, say, a dry-cleaning shop, you would first want to know about its cash flow. After all, you’ll want to be able to pay your bills from its operations.
Then you’d want to see how easy it would be for a competitor to open a shop right across the street. You’d want to see if the dry cleaner had any labor problems.
But you wouldn’t be asking yourself what the P-E ratio was or at what rate the company was growing, McCallister says.
McCallister’s approach works for him. The St. Petersburg, Fla., fund was up 4.7% this year going into Thursday. It’s been up every year since it started in late 1997, including 19.5% in 2000 and 19.2% in 2001.
McCallister seeks companies with some kind of advantage in their industry. Either they are the low-cost producer, they have better management or they use technology better.
Some of the companies in his portfolio, he says, have done a great job of adapting to the Internet.
One is Information Holdings (IHI). You’ve probably never heard of it unless you’re an engineer, lawyer or in a corporate marketing department.
The company maintains a huge database of trademarks and patents. If someone wants to find out if an invention has been patented or a trademark registered, he once had to write Informational Holdings and wait for an answer in writing.
Now, says McCallister, customers log onto a Web site and get their answer immediately. The company has found a way to use its database more efficiently. And no one is going to be able to duplicate what they have.
