Bearish on corporate profits in 1998, growth-stock picker Foster Friess gave investors in the $5 billion Brandywine Fund a year to forget. His untimely moves out of and into the market resulted in a 0.7% loss, vs. rivals' average gain of 18%. But through Jan. 22, the fund was up 3.3%, vs. a 4.1% decline for the Standard & Poor's MidCap index. Senior Writer Robert Barker spoke with Friess:
Q: How's business?
A: Great, now that we're back on track. The holdings of the other funds that exceed [our gains]--a large portion of those investments are Net stocks. Our philosophy is oriented toward companies with three years of profitability and more modest price-earnings ratios.
Q: So what's working?
A: Nokia is one. Sun Microsystems would be another. Also EMC, Tyco International, Dayton Hudson, 3Com, Gap, Tellabs, Seagate.
Q: If your typical [holding] is trading at 18 or 19 times your estimate of 1999 earnings, what's the average rate of earnings growth you expect?
A: The average is 38%.
Q: Where do you find those companies?
A: Telecommunications, in the broad sense--tech is still almost half of our investments. Also retailing.