(an aging population).
In the consumer cyclical sector, we’re a little underweighted-only about 6% of our total portfolio. We believe that the superstore concept is burying mom- and-pop retailers. We currently own Home Depot, Wal-Mart and Lowes. We have a view that we should own some energy, because we believe that this group is so depressed and unloved and that no one rings the bell when it’s time to buy energy. Consolidation plays in the industry should prove profitable. We are also overweighted in financial stocks, which normally grow faster than established industrials and they are always cheaper. We have also benefited from consolidation plays in the financial services industry.
SINGLETON: For 1999, we lead with technology. We have closely followed the trends in technology in terms of the product and how it’s integrated. We like the telecom services group, which is laying the foundation for all of these products to run and for us to globally communicate. One of the strong themes is actually going to be the reemergence of what we saw coming out of October and continuing [to grow]-the semiconductor, led by Intel. We also like the healthcare stocks, particularly the drugs and the device; and retail, because the power of the consumer is clearly there. You’re seeing huge gains in disposable income through stock market returns and this is leading to more and more purchases. You have the advent of the Internet, which is an easier way to buy something. We have questions on the financials, which have to come along with a bull market. You can’t have growth without financing that growth along the way. We are beginning to see modest welcome surprises in regional banking areas where the stocks don’t have the global market exposure to the same degree as the money-center banks. The broker-age stocks, par-ticularly the online trading brokerages like Charles Schwab have wide consumer appeal.
Roundtable Stock Update:
How our stock-pickers performed
Against a backdrop of market turbulence, the three stock-pickers of last
April’s investment roundtable identified a batch of growth, value and defensive
buys. For the most part, the stocks produced significant gains. What follows
reveals how our panelists-and investors-fared:
C. KIM GOODWIN
AMERICAN CENTURY GROWTH
As portfolio manager of American Century Growth, Goodwin looks for large caps that will outperform their sectors. Among her recommendations: Gillette, the leading producer of male and female grooming products, which split 2 for 1. Later in the year, the price of this defensive stock-a company that can withstand uncertain markets-was hurt by decreased international sales and heavy spending on the launch of the new Mach 3 razor. Her other two picks were Tyco International, the super-acquisitive conglomerate, and Microsoft, the software giant embroiled in a legal battle with the Justice Department, which also split 2 for 1. Their performance was golden.
|Gillette (NYSE:G)||$59.19||$ 51.00**||16.1%||16.2|
|Tyco (NYSE: TYC)||75.06||44.50||68.7||18.9|
|*As of 2/1/99
**Adjusted for stock split
ARIEL CAPITAL MANAGEMENT APPRECIATION FUND
One of the nation’s leading stock-pickers, McKissack advised investors on a