Spiros "Sig" Segalas, 75, the veteran manager of Harbor Capital Appreciation (symbol HACAX), currently has 40% of the fund in technology.
invests in the highest-quality companies he
can find and doesn't pay much attention to their prices.
I think his
approach is tailor-made for today's market.
invests only in premier tech firms that are boosting their market share and that should be able to increase annual earnings at double-digit rates.
"They're all loaded with cash," he
Whether you buy his
favorites or buy his
fund, I think you'll be amply rewarded. (Harbor's investor share class, which launched in 2002 under the symbol HCAIX, charges slightly higher expenses.)
Harbor Capital Appreciation
has delivered relatively good, if streaky, returns.
Over the past ten years through May 20, it lost an annualized 2%, putting it in the 41st percentile among large-company growth funds, according to Morningstar.
This year, the fund is up 11% -- ten percentage points better than Standard & Poor's
Since 2000, Segalas
says, many businesses have been reluctant to buy new technology.
"Tech equipment at a lot of companies is getting old," he
This happens at times, but it doesn't last," Segalas
Four Harbor tech winners
Segalas's four tech picks start with longtime favorite Amazon.com (AMZN).
The discount Internet retailer has plenty of room to expand from its dominant businesses in books, CDs and DVDs.
With superb technology and a huge and expanding customer base, it continues to grow rapidly-and to increase profit margins.
At its May 21 close of $75.96, the stock sells at 47 times the average analyst earnings estimate for 2009 of $1.63 per share.
Analysts expect earnings to rise 26%, to $2.05 a share, in 2010.
will grow faster than that, justifying the rich P/E.
says, the management team that Jobs assembled in the late 1980s remains in place for now.
team predict earnings of $5.50 per share for the fiscal year that ends September 30 and $6.30 for the September 2010 fiscal year.
The stock, at $124.18, sells for 23 times this year's earnings estimate and 20 times next year's.
(QCOM) is not only the dominant maker of chips for wireless phones, including smart phones, it also owns patents on CDMA technology, which has been adopted worldwide.
The patents pay a growing royalty stream.
Now that lawsuits with Nokia
have been resolved, Segalas
expects Nokia to become a big Qualcomm client.
"The handset market is down quite a bit, but the smart phone segment is growing very rapidly, led by Apple and RIMM
," says Segalas
He estimates that Research in Motion will earn $4 a share for the 12 months ending next February and $5 the following year.
At $72.98, the stock trades at 19 times February 2010 estimates and 16 times February 2011 forecasts.