November 1, 2003
Management Makes A Difference
Hedge fund manager Bill Thomason, CEO of Thomason Capital Management in Oakland, California, doesn’t spend much time on risky stocks once they start dropping in price. Last year, he emphasized the effect management has on a company’s bottom line and his picks proved his theory well.
Thomason’s private screening portfolio produced a gain of 34.21% from the time period spanning Sept. 6, 2002 to Sept. 5, 2003. By comparison, the S&P 500 climbed 14.26% and the Dow Jones Industrial Average grew 12.77% over the same period. “I still hold all of [last year’s picks], except I sold Trimeris in the low $40 range,” he says. The recommendation price for Trimeris Inc. (Nasdaq: TRMS), a manufacturer of HIV treatments, was $45.30, but the stock dropped 11% to $40.30 by September. “The company had no real financials to go on. It had the potential to go boom or bust,” Thomason explains. He advises investors to watch the biotech company because it produces some really innovative drugs.
Thomason’s other four picks all soared to double-digit gains of 20% or more. Stryker Corp. (NYSE: SYK) and Synaptics Inc. (Nasdaq: SYNA) have done so well, he cautions investors against buying too much more of either stock at current prices. Stryker, a company that develops, manufactures, and markets specialty surgical and medical products, was selling at $74.83 in September. It went up 29.69% from last year’s recommendation price of $57.70. Thomason picked the medical device maker because the nature of its business tends to protect it during recessionary times. Thomason says investors should “buy more if it slips below $60.”
Thomason started selling the tech stock Synaptics when it reached $14, four dollars more than the target price he set. He recommended the stock at $5.93. It was selling near $12.08 in September.
Southwest Airlines Inc. (NYSE: LUV) and Public Storage Inc. (NYSE: PSA) didn’t hit their target prices but still yielded 27.84% and 20.83% returns, respectively. Southwest was selling at $18 in September. Thomason realizes that the airline industry is very volatile and affected by exterior forces, such as terrorism and gas prices, but he is still confident that the stock will reach its target of $25 by March 2004.
Selling at $38.40 in September, Public Storage is still a core holding for Thomason. He says it should reach its $40 target by March as well: “It’s a well-run company and, as an added bonus, it pays a dividend.”