NEW YORK (CNNfn) - Fund manager David Alger is fond of predatory animals.|
In his corner office on the 93rd floor of the World Trade Center with sweeping views of New Jersey, Alger keeps over his desk a painting by an unknown artist of a fox that he bought years ago at an auction. Over the couch are two paintings of falcons.
"The fox struck me as saying something about me, which is that I am aggressive, cunning, and jump on opportunities," Alger said. "I like to think of myself as a predator when I'm looking for stocks."
Alger, 56, is one of Wall Street's best-known managers because of his knack of hunting down winning growing stocks.
He is chief executive of Fred Alger Management, an investment firm founded by his older brother, Fred, a prominent manager of the 60s, 70s and 80s. David Alger also oversees a fleet of mutual funds that have consistently led the pack in their categories.
One of the funds he manages, Spectra Fund, is the top-performing large growth fund of the decade ended Dec. 31, 1999, according to fund researcher Morningstar. The fund has a 10-year annualized return of 29.21 percent, unmatched by any other fund in the 1990s. That record also makes Alger one of the 10 best long-tenured managers of the decade, Morningstar said.
He is co-manager of 16 funds, including Alger Capital Appreciation Fund, Alger Growth Fund, and Enterprise Internet Fund, and oversees a research staff of 20 people.
Fred Alger Management has also been a training ground for some of the fund industry's biggest stars, including Tom Marsico of Marsico Capital Management and Helen Young Hayes of Janus.
A courtly man with a patrician sense of humor, Alger was relaxed during a recent interview on the first trading day after the Nasdaq and the Dow experienced their biggest one-day point losses in history.
"I'm not one of these 20-year-old managers who's never seen a bear market," Alger said.
The son of Frederick Alger Jr., ambassador to Belgium during the Eisenhower administration, he grew up in Grosse Pointe, Mich. and Europe. He attended boarding school in New England and graduated from Harvard University in 1966. He got his MBA from University of Michigan in 1968.
A history buff, Alger learned to love art as a child when his mother dragged him to museums across Europe. He had dreams of going to law school and becoming a criminal lawyer until his brother inspired him to try Wall Street. According to the family story, Fred gave him a stock tip and it tripled in value. Alger was hooked. He started working for Fred Alger Management in 1971.
"Fred taught me just about everything I know about the business," Alger said. "He taught me a tremendous reverence about research. He taught me the stock market responds to change. He taught me that stock markets go higher than you would ever expect in good markets and lower than you would expect in down markets."
Fred Alger is living in Switzerland and was unavailable for comment.
While recent volatility has left many people on Wall Street running, Alger is still a big believer in growth stocks. He said he would find value investing - in which managers look for unloved, overlooked and otherwise cheap stocks -- "incredibly boring."
"Over time, growth stocks are the best way to invest," Alger said. "They go through so many stages."
His one concession is that he plans to be a little less aggressive and make sure he stays away from stocks that don't have earnings or strong business models. He has anywhere from 5-to-15 percent cash in his funds, and he's trying to sell stocks that he believes won't recover from the correction. He declined to be more specific about his strategies.
He expects the market will rebound in the second half of the year, and isn't worried about technology losses that have left Spectra Fund down about 4 percent this year.
"We have a 50 percent weighting in technology and a lot of those stocks are down substantially," Alger said. "That's not necessarily going to persist."
One top holding is Microsoft (MSFT: Research, Estimates), which is battling the government in an antitrust case. The U.S. Justice Department is proposing to break up the company, after a judge ruled Microsoft violated state and federal antitrust laws. Alger said he's holding onto the stock, though he is not adding to the position.
"It's political," Alger said of the case. "The strategy of Microsoft is to appeal and wait until the next (Washington) administration that is hopefully Republican and more user-friendly."
Among his favorite growth stocks are eBay (EBAY: Research, Estimates), Yahoo! (YHOO: Research, Estimates) and Cisco Systems (CSCO: Research, Estimates).
"The larger names we're going to hold come hell or high water," Alger said.
While Alger is known as an art buff, and is a major donor to the Frick Museum not far from his New York home, he said he draws more parallels from his love of history.
One of Alger's favorite characters, for example, is Edward IV, a king who was forced from the throne in Renaissance England. Edward was a flawed but skilled leader who knew how to take advantage of a situation, Alger said.
So on Easter Sunday 1471, Edward borrowed 4,000 soldiers from the Duke of Burgundy and invaded England.
"Instead of despairing, he invaded England with just 4,000 men," Alger said. "He's my example of when things look the bleakest, if you work hard, you can turn things around."