Fund Shuns Large Cap Business Cycles

by Alan Lavine and Gail Liberman

Conventional thinking is that large company growth stocks have underperformed medium company and small company growth stocks for the past few years. So they’re due.

     But Bill D’Alonzo, chief executive officer and manager of the top-rated Brandywine Fund and the Brandywine Blue fund, is one expert who’s not necessarily banking on this.

Both of his funds aim to buy fast-growing companies at reasonable prices. They invest based on earnings and stock prices. The average holding in his Brandywine Fund is growing earnings at 24 percent this year, he says. By contrast, blue chip companies are growing earnings at just 11 percent.

Over the past five years, the Brandywine Fund has grown at a 9.6 percent annual rate. The Brandywine Blue Fund has grown at 9.83 percent annual rate.

Stocks Alonzo favors:

• Lowe’s Companies rather than Home Depot. Reason: Lowe’s is expanding business by opening new stores at a time when Home Depot isn’t.

• Technology stocks, particularly Techtronix. This company makes equipment used to design, test, deploy and maintain next generation communications networks.

• Mobil Mini. This company leases refurbished shipping containers for storage space.

• Precision Castparts. A maker of nuts, bolts, rivets and other basic materials.

• Emerson Electric. This company is reaping profits from its analytical instruments, valves and system controls to control the flow of fluids. Other business segments doing well include the fan and compressor operations.

Alan Lavine and Gail Liberman are husband-wife personal finance columnists, journalists and authors. They are the authors of "Rags To Retirement," published by Alpha Books. Their columns appear in newspapers throughout New England and the Southeast, as well as online. Their commentary on mutual funds and personal finance is carried by 200 radio stations nationwide every Sunday over Business News Network's Charles DeRose Financial Advisor Show. Al and Gail’s new book is "Rags To Retirement:  Stories from people who retired well on much less than you think," published by Alpha Books.

More articles by Al and Gail can be found here.