John Osterweis
Osterweis Fund
John Osterweis's caution -- his Osterweis Fund currently keeps 14% of its assets in cash, more than 89% of his peers -- has helped generate long-term success: 11.9% annual returns over the past 15 years, easily beating the S&P 500's 7.8%.
Right now he sees potential in health care stocks and endorses Johnson & Johnson. "That may sound a little conventional," he says, "but it's a phenomenal stock for someone who doesn't want a lot of risk and wants to make some money." J&J, with a 3.5% dividend yield, is trading at 13 times earnings, down from 20 in 2005.
Concerns about looming expirations of key drug patents have hurt the shares, but Osterweis says those effects are accounted for in the current price. Besides, he adds, J&J is extremely diversified and has $16 billion in cash it can use for acquisitions.
--M.K.
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