NEW YORK (CNNfn) - Wall Street may be rocking with volatility, but high-flying fund manager Garrett Van Wagoner thinks the market is heading higher.|
Van Wagoner, portfolio manager and president of Van Wagoner Funds, appeared recently on CNNfn to talk about his investment strategies, his focus for the future, and his Post-Venture Fund.
Post-Venture Fund, with assets of $391 million, earned about 237 percent in 1999, according to fund-tracker Morningstar.
The fund's holdings include Ariba (ARBA: Research, Estimates), OnHealth Network †(ONHN: Research, Estimates) and Cobalt Networks (COBT: Research, Estimates).
His other funds also soared last year, with returns ranging from 126.9 percent to 291.2 percent, Morningstar said.
Van Wagoner on Wednesday described his style as growth-stock investing.† He looks for companies that are new or branching off in a new direction.
CNNfn: What is a post-venture fund? Isn't every company, ostensibly, a
Van Wagoner: Well, at some point in their life they are. Really, the way
we define post-venture is the companies in that portfolio have had venture capital financing over the last five years. So they're very young companies,
although their market caps could be large, particularly in this bull market, but they are younger companies.
CNNfn: I was looking at a breakdown of your portfolio, and what's interesting is that you've put a lot of money -- in fact, the predominant part of your portfolio is software. I'm wondering what you like in the software sector.
Van Wagoner: Well, the theme that we picked up on about a year, a year-and-a-half ago now, was this build-out of the Internet and the scramble that the major fortune, global 2000 companies were going to have to do to play catch-up to the dot.coms, in that they were going to need to spend an awful lot of money on re-architecting their businesses and building than infrastructure. And that's happened. Particularly now with the Y2K fears over, I think that spending is full steam ahead, and we played that sector very hard across the board in a whole host of companies and sub-industries.
CNNfn: What's your take on the markets this year, because for tech investors in particular, it's been a rough four or five weeks.
Van Wagoner: It's an interesting time period. We've got the two indicators, the January indicator saying we're going to have a bad year and the Super Bowl indicator saying we're going to have a good year. So those two are mixed. It's interesting to note that the Fed's meeting today to raise interest rates -- I know that's in the market, but it doesn't seem like the Fed has any control over the market. So, right now with the cash pouring in, I think the market is going to continue to go higher. There's just too much money right now chasing two few stocks.
Listen to an excerpt from Van Wagoner's comments:
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CNNfn: You think they can move higher even if the Fed is very aggressive in its move on interest rates?
Van Wagoner: Frankly, I've got a perverse opinion about this. I think if the Fed is aggressive in raising interest rates, the market is going to go up faster because I think people are going to assume that the higher they go today, the quicker the rate increases are going to be over. So I think if they do 50 basis points, we're going to see a very strong market this afternoon.
CNNfn: So you have a lot of money flowing in: What stocks are you††† chasing?
Van Wagoner: Well, we're trying not to chase anything. We're actually letting cash build up right now. We were relatively fully invested coming into the end of the year and we're just letting the cash kind of build up. We did do some buying in the first week of January. We also did some buying last week, selectively, but not very much.
The real position changes haven't been very great. The only area that we've, from a fundamental standpoint, moved significant money in over the December/January time period was into the energy area where we think the fundamentals are outstanding and prices are still fairly reasonable.
CNNfn: Telecommunication sector is a large part of your portfolio. That's a big sector. Are you concentrating your investments in the wireless, or exactly where are you putting your money to work there?
Van Wagoner: Yes, telecommunications, both wireless. We're also involved in the DSL space quite a bit. The phone companies nationally are trying to roll out broadband access to the home, and their solution is DSL-based. Those two areas, wireless and DSL, are really where we're focused.