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February 16, 2006
Apples to Apples
When you get a bunch of mutual fund managers in a room together, you are bound to get lots of different opinions about stocks and the direction of the markets. But at a Lipper event earlier this week to recognize top-performing fund managers, it was clear that two of the fund managers in attendance see eye to eye on Apple.
One Apple fan is Tom Galvin, whom I remember from his strategist days at CSFB. Instead of taking the consultant route, which is what many former investment strategists seem to do after their place of employment makes a major acquisition or is merged out of existence, Galvin decided to become a fund manager at U.S. Trust. For the past three years, he's been managing the Excelsior Large Company Growth fund.
Galvin is a fan of Apple--and not just because every person on the New York City subway system seems to be listening to an iPod. "The iPod has a halo effect," Galvin says. Amid the iPod's buzz, more people are rethinking the decision to buy PCs and are going with Macs. Galvin argues that the hidden gem in the Apple empire is the Apple Store, which is generating $1 billion in accessory sales.
The other Apple fan is Rich Cervone, co-manager of the Putnam Investors Fund. He says investors underestimate Apple's potential for revenue growth--as well as the margins that growth could generate--over the next few years. "It's a stock that was easy to sell a long time ago," Cervone says. "Everyone has been saying that the iPod will lose marketshare beginning tomorrow as competitors come out with new products--that hasn't happened."
When a company like Apple launches a new product, people pay attention. "That value is real," Cervone says. "In a world of digital media and computer viruses, what's better than a Mac?"
Not much, if you ask my techie husband. I live in a Mac-happy house: We've got a Mac Mini, a Powerbook G4, a sickly Powerbook G3, an iMac as well as two iPods and a nano in my household. My hubby wants you to know "there's a 9600 in storage, too."
In other words, nothing is better than a Mac.
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