Looking for Long-Term Trends

James Francis' 'trendy' picks need a little more time to blossom

Last year, when we spoke to James Francis, CEO of New York-based Paradigm Asset Management, he was urging investors to “take advantage of longer-term trends that will impact the market.” He favored telecommunications and healthcare companies in his Private Screening and the results were considerably disappointing, with his overall performance registering a 29.77% loss. Over the same 52-week period, the Standard & Poors 500 Index practically stood still, registering a loss of 0.12%.

In spite of the bumpy results, Francis, who manages his firms’ $1.5 billion in assets with a “conservative and risk-controlled” approach, is still optimistic about prospects for growth in the healthcare and technology sectors.

The medical device manufacturer Zoll Medical Corp. (Nasdaq: ZOLL) was Francis’ best performer, showing a 9.67% gain, going from $34.94 to $38.32 a share. The popularity of the company’s noninvasive cardiac resuscitation devices, external pacemakers-defibrillators, and mobile ECG systems allowed it to maintain a solid performance during the downturn.

Another healthcare sector play, Pfizer Inc. (NYSE: PFE), also did well, practically breaking even, losing just pennies since last year. The global pharmaceutical giant nudged down a mere 0.30%, from $39.55 to $40.11 a share. Francis says as long as Pfizer’s drugs continue to meet the needs of baby boomers, the company will do fine.

Attempting to capitalize on interest rate cuts made by the Federal Reserve, Francis selected J.P. Morgan Chase & Co. (NYSE: JPM), the global financial services company. While the company lost 17.98% since his recommendation, falling from $41.13 a share to $35.27, Francis maintains it is still one of the top players in the banking sector.

Unfortunately, the upward trend Francis forecasted for his telecommunications plays didn’t materialize. His choices, American Tower Corp. (NYSE: AMT) and SpectraSite Holdings (Nasdaq: SITE) were intended to capitalize on the growth of wireless technology, but with the economy in recession, growth at the two firms was delayed. American Tower, which operates wireless communications towers, was hit hard, dropping 72.42% from $19.25 a share to $5.31. And SpectraSite, which leases and owns wireless antenna sites on commercial buildings, lost big as well, falling 75.89% from $3.94 to $0.95. Francis still believes the wireless telecommunications industry has many years of growth ahead, and as more wireless technology is made easily accessible, the revenues at these companies will improve.

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