Diversity drives CI Global fund Manager believes in... -
[Cached Version]
Published on: 8/15/2001
Last Visited: 8/15/2001
While biotechnology was pulling health care stocks higher last year , portfolio manager Andrew Waight was building positions in hospitals , specialty pharmaceuticals and some of the smaller , emerging biotechs for the CI Global Health Sciences Sector fund.
Those stock picks helped the $396-million fund post a one-year return of 7.6 per cent for the year to July 31 , compared with a 38.18-per-cent loss for the fund group and a 46.19-per-cent loss for the Nasdaq composite index.
Mr. Waight notes that the fund , which he has managed for just more than a year , is classified as global science and technology , which means that its performance looks pretty good against its peers.Many of them are technology funds that have been trampled by the stampede out of tech and telecom , he points out.
But even within the health sciences niche , he believes the fund has benefited from spreading its holdings around.
It's a very , very diverse sector , and that's essentially how the fund is built up -- taking advantage of all of these different sectors within health care , Mr. Waight said.The fund is up 8.75 per cent so far this year.
Top holdings include household names such as Pfizer Inc. , Bristol-Myers Squibb and GlaxoSmithKline PLC , along with lesser-known names such as Mylan Laboratories Inc. , McKesson Corp. , CYTYC Corp. and Fisher Scientific International Inc..
During 1999 and 2000 , the funds with the highest concentrations in biotechnology posted the most blistering returns.This year , biotechs and the big drug companies have seen their stocks lose ground.
...
Mr. Waight believes there are still opportunities in those areas , but he also likes the prospects for nursing homes , instrument makers and hospitals.
Earnings growth at the specialty drug companies also looks very good , he adds.
He points to a company such as Biovail Corp. of Mississauga , which is finding methods of making existing drugs last longer in the body so patients don't have to take them as often.
Because the research involves a product that has a history , the company can do shorter clinical trials , Mr. Waight said.The products are also less risky and get to market faster.
Investors like that and they're willing to pay for that , Mr. Waight said.
The manager believes specialty pharmas will see earnings per share grow 30 to 40 per cent a year for the next few years , compared with global growth rates of 10 per cent for the marquee drug makers.
The law of big numbers dictates that it's harder to get the bottom line moving for the pharmaceutical giants , he adds.
When choosing stocks among the specialty companies , Mr. Waight looks for well-established players with at least one drug on the market or that has passed clinical trials.The company can then use the technology and cash flow from the first product to conduct further research.
Mr. Waight is also building positions in many of the generic drug companies.Generic versions of the anti-depressant Prozac , for example , will constitute a huge market , and many other widely used drugs are coming off patent soon , he adds.
The manager believes investors should have exposure to the many developments in health sciences today.He points to the aging of the population , the sequencing of the human genome , the maturation of the biotech industry and new breakthroughs in computerized laboratory equipment as big drivers of future growth.
The biotech industry had a bit of a bad name after investors created a mini-bubble in the stocks in 1992 and '93 , he said , but Mr. Waight points out that many fledgling companies from those years are now successful drug makers.
All of a sudden , investors have these success stories they can point to -- drugs that successfully navigated the clinical trials process and are selling and making a lot of money for the companies , he said.That gets a lot of interest in the sector..
Mr. Waight points out that some widely used drugs -- including Amgen Inc.'s Epogen to treat anemia or Biogen Inc.'s Avonex to treat multiple sclerosis -- emerged from biotechnology.
...
Mr. Waight was prudent to avoid too many big biotechnology stocks that soared to high price-to-earnings multiples , Mr. Kangas believes.
20 online sources [ view sources ]
Profile is not claimed [ claim profile ]
