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One big winner helps Jeffrey Marcus' portfolio outpace the S&P 500

A company that makes cast metal parts and fasteners for the aerospace industry may not sound exciting, but from May of last year through early June, shares of Precision Castparts Corp. (PCP) nearly doubled, jumping an eye-popping 99%. Powered by that performance, the portfolio assembled by Jeffrey Marcus, senior portfolio manager at Paradigm Asset Management Co. (No. 14 on the BE ASSET MANAGERS list with $1.02 billion in assets under management) returned 27.4%, outpacing the S&P 500′s 19.5%.

At the time of his selections, Marcus chose stocks from four different industries to hedge his bets against an expected economic slowdown. The growth of the nation’s gross domestic product–which measures the size of the overall economy–did indeed slow beginning in the second half of 2006. But Marcus’ portfolio proved to be sturdy.
Precision Castparts reported impressive numbers. For the quarter ending April 1, sales climbed 64% over the year prior, and profits more than doubled. Marcus says another driver for the stock has been its recent addition to the S&P 500 stock index which means that pension plans and other institutional investors that hold the companies in the index have to buy PCP shares.

Shares of defense contractor Lockheed Martin Corp. (LMT) posted a healthy gain of 35.1%. Marcus’ two other picks lost ground. Women’s clothing retailer Coldwater Creek Inc. (CWTR) saw its shares drop 12.3%. Trailing the pack were shares of Archer Daniels Midland Co. (ADM) which fell 12.2%. “This is still a good long-term play,” he says. “It’s just going to be volatile.”
Price Price Total
Company (Ticker) 5/18/06 4/12/07 Return*
Archer Daniels Midland Co. (ADM) $39.34 $34.54 -12.2%
Coldwater Creek Inc. (CWTR) 27.79 24.37 -12.3
Lockheed Martin Corp. (LMT) 71.71 96.89 35.1
Precision Castparts Corp. (PCP) 58.66 116.74 99.0
Total Portfolio 27.4
S&P 500 1,261.81 1,507.67 19.5
*Includes stock splits and dividends source: yahoo! finance
CURRENT VALUE OF $4,000 INVESTMENT $5,096.00

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