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Marsico racing to success
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November 26, 1999: 3:40 p.m. ET
Two years after leaving Janus, Tom Marsico still focuses on growth
By Staff Writer Martine Costello
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NEW YORK (CNNfn) - Spend any time talking with fund manager Tom Marsico and it's not hard to see why he chose the legendary race horse Secretariat for the logo of Marsico Capital Management.
Marsico, a star manager at Janus Funds who left in 1997 in part because he felt the company was spreading its resources too thin, wanted to focus all his energy on winning top returns.
"I didn't want to distract my attention from managing money," Marsico said this week.
Tom Marsico
The Marsico Focus Fund, with $2.6 billion in assets, is up 22.6 percent year to date as of Oct. 31, according to fund-tracker Morningstar. The Marsico Growth & Income Fund, with $836 million in assets, is up 22 percent in the same time, Morningstar said.
Both funds are ranked in the top 20th percentile of their categories, and Morningstar also named Marsico "Manager of the Year" in 1989 and "World Class Manager" in 1994.
Like Secretariat, one of the greatest race horses in history and winner of the coveted Triple Crown in 1973, the stocks in Marsico's portfolios are the ones that leave their competitors in the dust. Marsico says he looks for growth in many different places.
Secretariat at Claiborne Farm
(From Claiborne Farm Web site)
"We look for companies going through significant change, as well as companies going through unit growth," Marsico said.
His classic growth stocks include Wal-Mart (WMT), General Electric (GE), Home Depot (HD) and Genetech (DNA). Companies going through a significant "lifestyle change" include Citigroup (C), the product of the merger between Citicorp and Travelers Group Inc.
He also likes to invest in smaller names that have the potential to grow into global market leaders, like hotel company Four Season (FS). The stock had been trading at 16, with a market capitalization of under $500 million. The stock closed Friday above 49 and its market capitalization is about $1.5 billion, he said.
The other group of stocks he owns are aggressive growth companies that are introducing new products. One of his best recent successes in this category has been Qualcomm (QCOM), a maker of digital wireless communications products. Marsico started buying the stock when it was trading in the mid-60s. On Friday, it was trading at 385-1/4.
Qualcomm represents 8.6 percent of the Marsico Focus Fund and is up about 1,289 percent this year, according to Morningstar.
Marsico said Qualcomm benefited from selling its unprofitable infrastructure business subsidiary. At the same time, the company's CMDA wireless technology has become broadly accepted, he said. The company's HDR technology will become the next industry standard.
As far as his old employer goes, Marsico shrugs off discussion about Janus and his less-than-amicable parting after a failed takeover attempt as "old history." (Janus declined comment about Marsico).
He says he also doesn't pay attention to the Janus Twenty Fund, the high-profile fund he ran from 1988 through 1997. Janus Twenty is beating his Focus Fund with year-to-date returns as of Oct. 31 of 30.8 percent. Under Marsico's watch, the fund had annualized returns of 21.2 percent, beating the S&P 500's annualized returns of 18 percent in the period.
"I left to start my own business, and to build the business under a new model that I thought was a better model to manage money," Marsico said. "I had a different vision for the way I think the company should be run. Obviously, Janus has continued to be very successful. I take great pride in their success. I trained most of their portfolio managers."
One difference from Janus is that Marsico has outsourced jobs like accounting and legal work to focus on money management. He's also scaled back in how many accounts he manages. At Janus, he ran several large pension accounts in addition to Janus Twenty and a small cap fund.
"I was running a small cap fund with Jim Craig and it made no sense for us to manage a small cap fund when we were managing tens of millions in large cap money," Marsico said. Craig is now director of research at Janus.
Likewise, don't hold your breath for a Marsico Value fund (Janus is launching a value fund on Dec. 31).
"We chose Secretariat as our logo to make the client understand that performance comes first for us," Marsico said. "Janus is launching a value fund, and they're trying to fill out a slot for the 401(k) area. We're not doing things for marketing reasons or to fill out a product line."
"I'm just trying to provide consistent results and to beat the market."
Speaking of large-cap growth funds, here are some winners and losers tracked by Lipper Analytical Services:
The top performers are: Berkshire Focus Fund, up 6.21 percent for the week Nov. 18 through Nov. 24 and up 88.44 percent year to date; followed by PBHG Large Cap 20 Fund, up 5.21 percent for the week and up 61.04 percent year to date; and Monument Medical Sciences Fund, up 4.92 percent for the week and up 39.26 percent year to date.
At the other end of the list is PIMCO Core Equity Fund, administrative shares, off 2.18 percent for the week and up 16.32 percent year to date; followed by Fifth Third Pinnacle Fund, Investment A Shares, off 1.97 percent for the week but up 6.16 percent year to date; and White Oak Growth Stock Fund, off 1.85 percent for the week but up 42.34 percent year to date.
-- Staff writer Martine Costello covers mutual funds for CNNfn.com. If you have any comments about mutual funds you can contact her at cnnfn.interact@turner.com
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