First, the good news. Corporate spending on data storage as well as networking software and services will rebound soon.
So said Jim Callinan, chief investment officer of RS Investments’ growth group and manager of tech-laden $1.2 billion RS Investment Trust:Emerging Growth (RSEGX). Callinan’s remarks were made June 12 to institutional analysts and strategists in Boston.
Callinan also forecast bad news. Tech and other highflying sectors are bound for a correction once investors start to see second-quarter earnings. Callinan also co-manages $56.2 million RS Investment Trust:Information Age (RSIFX) and $41.6 million RS Investment Trust:Internet Age Fund (RIAFX).
The reason for the impeding sell-off is that investors have pumped a lot of top performers up to valuations beyond what their earnings warrant, he said.
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Emerging Growth is a small-cap fund. Callinan is already taking defensive steps with that portfolio.
He cut Marvell Technology Group (MRVL) over the past 13 months. This year he has trimmed MicroStrategy Inc`A` (MSTR) and OmniVision Technologies (OVTI).
And he sold all or pared positions that were has-beens or laggards.
Those included nursing-home operator Sunrise Senior Living (SRZ), which is down 4.98% this year vs. a 14.9% gain for the S&P 500.