|
Tech funds turn bullish
|
 |
October 22, 2001: 10:10 a.m. ET
Garrett Van Wagoner, Kevin Landis are still buying stocks, while Walter Price is cautious.
|
NEW YORK (CNNmoney) - Out on the West Coast, Garrett Van Wagoner of the Van Wagoner Funds was trying to sort the investing world into the known and the unknown following the terrorist attacks.
Even before Sept. 11, his tech-filled funds had sunk as much as 65 percent for the year. Van Wagoner now forced himself to focus solely on what he could control.
"If they crop-dust Chicago or blow up Dallas or something like that," he says, "it's gonna be another huge leg down in the market. But as a professional investor, I just don't believe you can structure a portfolio with big unpredictable stuff like that in mind." Yet the world had changed, he says.
|
|
|
|
Garrett Van Wagoner | |
"There was no doubt, once an hour went by, that any chance of an economic recovery this year was gone," Van Wagoner says. "As far as our returns, they already sucked, and any possibility of having a good year was now shot to hell."
Van Wagoner normally trades as fast he talks, dumping a stock at the faintest whiff of trouble. But while calling his companies in the days after the attack, he was the epitome of patience: "Our questions weren't, 'Are you going to make your September quarter?' We know that number is going to stink now. But: 'How has this changed your long-term planning? Are you in a bunker mentality or are you already positioning yourself for the future, for '02 and beyond?'"
In the face of terrorism and a near depression in the tech sector, Van Wagoner has turned wildly bullish. He reasons that the attacks have smothered venture-capital funding for new technologies being developed by private firms. That means existing public companies with advanced technology-including such Van Wagoner favorites as I-Many (IMNY: down $0.10 to $3.80, Research, Estimates) , Informatica (INFA: up $0.45 to $8.44, Research, Estimates) and Interwoven (IWOV: down $0.04 to $7.10, Research, Estimates) -- should face less competition.
And yet "valuations are as low as I've ever seen them," he says, "so we've been buying every day since the markets reopened."
Kevin Landis, head of the Firsthand Funds in San Jose, is another tech investor who groped his way to a bullish outlook. Sept. 11, he says, "serves first and foremost as an incredibly visceral reminder of how much uncertainty you have in your world."
But Landis is certain of one thing: "Disasters, whether natural or man-made, are forms of economic stimulus. Most of the replacement comes out of insurance-instead of out of normal cash flows. That's the reason that any disaster gives you a silver lining of economic recovery."
But others drew bleaker conclusions.
Walter Price, co-manager of Dresdner RCM Global Technology fund, was heading from Italy to a conference in Japan when he learned of the attack. Even before the disaster, his prognosis for tech stocks was grim.
Price told his staff back in San Francisco to dump travel-related stocks like Expedia, an online booking company. He bought defense stocks and kept 30 percent of the fund's assets in cash.
"If you look at a several-year period, tech will come back," he predicts, "but there will be fewer companies and it will be less dynamic because customers won't have the wherewithal to spend in anything but a measured way.
"In three decades, he adds mournfully, "This is the worst I've ever seen the tech industry." 
|
|
|
|
|
 |
|
