When the Dow plummeted 279 points on April 17 and the Tocqueville Opportunity Fund (TOPPX) lost 1.63%, its portfolio manager, Thomas Vandeventer, didn’t flinch.
“The market tends to overreact sometimes,” says Vandeventer. “Because we’re longer term investors we can take advantage of that volatility.”
He will often buy stocks on those big down days, adding to positions the fund already has or establishing new ones.
It’s part of an overall bottom-up diversified strategy that’s been working for the fund. The Tocqueville Opportunity Fund is one of a select group of actively managed funds that has been consistently beating the market over time. Year to date, it’s up 11.3%, compared with 7.4% for the Russell 2500 growth index (R25IG) that it tracks and 1% for the S&P 500. Morningstar ranks Tocqueville Opportunity Fund the number one mid-cap growth fund year-to-date and for one year.
Vandeventer categorizes the fund as” smid-cap”—a combination of small- and mid-cap. “We’re not mid-cap or small-cap,” says Vandeventer. “We’ve got feet in both markets and we’re a beneficiary of that.”
Lately the fund has been a beneficiary of big takeovers in health care and technology — the two sectors it’s been favoring. “Already this year eight to nine percent of our portfolio has been taken over for cash,” says Vandeventer. Among those holdings acquired this year are Concur Technologies, bought by SAP (SAP); NPS Pharmaceutical purchased by Shire (SHPG); and Cubist, acquired by Merck (MRK). An acquisition of Pharmacyclics (PCYC) by AbbVie (ABBV) is not yet finalized.
Five of the fund’s top 10 holdings are in health care — primarily biotech; three are technology companies. “There’s a real revolution attributed to genetic science … attacking diseases on a very targeted basis,” says Vandeventer.
The $102 million fund with a 1.3% expense ratio owns larger biotech companies, like Regeneron Pharmaceuticals (REGN), and smaller companies, like Alnylam Pharmaceuticals (ALNY). “A lot of people haven’t heard of these [smaller] companies,” says Vandeventer. But he follows them from early trials to drug development, watching to see if they hit certain milestones, and then expands his commitment if they do.
Like a pawn that can win the chess game by steadily moving across the board to the other side, becoming a queen, these companies can “creep along,” says Vandeventer. “You have to pay attention to them.”
On the tech side Vandeventer favors software companies that “lower the total cost of ownership,” such as ServiceNow (NOW), which uses the cloud to help automate workflow and streamline everyday work processes for companies.