Nov. 4, 2004 — John O’Hare began running the Oppenheimer Mid Cap/A (OMDAX) in October 2003, replacing Bruce Bartlett, who left Oppenheimer Funds. Since then he’s instituted more than a few changes in the portfolio.
To start, he’s beefed up its holdings to 50 to 70 stocks from the 40 or fewer his predecessor typically owned while increasing the number of industries it invests in. In the same vein, O’Hare, unlike Bartlett, is not inclined to make big sector bets. He also has limited individual positions to a maximum 3% of the fund’s assets.
Under O’Hare, the $955-million fund still focuses on growth stocks, but he leans towards slower growing companies than Bartlett did. He puts more emphasis on those that increase earnings and sales at a consistent, sustainable pace.
O’Hare has also changed the fund’s performance for the better. He guided it to a total return of 6% this year through September. That put it well ahead of the average mid-cap growth fund, which lost 0.1%. Oppenheimer Mid Cap had trailed its peers in 2003, when it gained 24.1% and they rose 35.8%.
Prior to joining Oppenheimer a year ago, O’Hare piloted the North Track Funds Managed Growth Port/A (PNMAX) for more than four years.
Before he analyzes a company’s finances, John O’Hare wants to make sure it’s the top or No. 2 player in its field and has seasoned managers with successful track records.
“I don’t want the wannabes,” says O’Hare. “I want people who have done it before, I want the experience.”
After those hurdles are cleared, O’Hare looks for businesses with solid balance sheets and little debt.
Unprofitable companies won’t even be considered by O’Hare, who focuses on those fattening their bottom lines by 15% to 20% and increasing revenues at a faster-than-average rate.
Consistent, sustainable earnings and sales growth is crucial to O’Hare, who feels a very rapid pace can’t be maintained. That’s one of the things that distinguishes him from the fund’s previous manager, who was willing to accept racier results, O’Hare says.
Once he finds a stock that meets his other requirements, O’Hare considers its valuation. “Typically, when I buy companies in different industries, I’ll usually pay one of the higher multiples, because I’m buying one of the best companies,” he says.