Welcome, Fools, to part 59 of our several-thousand-part series, "Better Know a Stock Picker." It's loosely, but not too loosely, based on Stephen Colbert's "Better Know a District" from The Colbert Report.
Like Stephen and his thorough investigations into America's congressional districts, each week I take a look at a fund you may want to own. What's on tap this week?
|
Baron iOpportunity (BIOPX) |
|
|---|---|
|
Expense ratio |
1.45% |
|
Fund size |
$198 million |
|
1-year return |
29.45% |
|
5-year return |
29.08% |
|
10-year return |
N/A |
Top 5 stock holdings
|
Company |
Percentage of Assets |
|---|---|
|
Equinix |
4.1% |
|
Apple |
4.0% |
|
Research In Motion |
3.9% |
|
Charles Schwab |
3.9% |
|
CME Group |
3.6% |
Meet Mike Lippert
The fightin' team at Baron iOpportunity is led by Mike Lippert. He was an analyst with the fund before taking the reins from Mitch Rubin, who left last March to start a hedge fund.
But iOpportunity hasn't suffered. Lippert has outperformed the benchmark Nasdaq by nearly 10 percentage points in the year ended Sept. 30. The S&P 500 trails by roughly 13% over the same period. Eat that, Wall Street.
That's Apple you taste; Lippert is a fan of the Mac's daddy. In March, he told BusinessWeek that the iconic iPhone could "grab a 5% or 10% market share." Competition from HTC and Nokia
How he invests
Successful growth investors are often spot-on. They have to be. Instead of shopping at the bargain rack, Lippert aims to buy premium stocks that possess an obvious and durable competitive advantage. Here's how he put it in a February interview with MarketWatch:
Growth can't be based on just one product cycle. The companies need to have some competitive advantage and their business needs to have some barriers to entry.
Don't take that to mean that Lippert ignores the sticker price. He simply prefers to buy stocks he'll be able to hold for years. No surprises there. His boss, Ron Baron, has made a fortune for himself and investors buying and holding excellent businesses.
He's not the only one. Had you examined the 10 best stocks of the past decade, you'd have found very few obvious values. But you would have found some excellent high-growth, defensible businesses, such as Hansen Natural.
Is this fund for you?
If there's a problem with iOpportunity, it's the fund's too-heavy allotment of Internet stocks. If you believe the Web will continue to expand at a phenomenal rate, then you've got every reason to study iOpportunity. Doing so may be safer than owning Apple and RIM on your own.
But you'll pay to diversify like that. Baron charges iOpportunity's shareholders a princely 1.45% expense ratio annually, exactly none of which will spare you from the volatility that comes from owning fast movers like Google
If you're among that group, don't worry. Plenty of market-beating options exist for the Foolish fund investor. You'll find many of the best in the Champion Funds portfolio. More than 72% of lead analyst Shannon Zimmerman's picks are beating their respective benchmarks as of this writing. Intrigued? Accept a 30-day free pass to the service.
And till next time, fund nation, good night.
For more Foolish coverage of tech titans:
- Peter Doyle and Murray Stahl have created a new paradigm for returns.
- Tech is much more than fancy info tech for Clay Brethour, Elizabeth Jones, and Dave Carlsen.
- Harry Lange says it's time for the tech rally to begin.
