Heiko Thieme Has A Sixth Sense For Stocks

Most people have a few things they feel they must accomplish before they die. For Heiko Thieme, climbing the Matterhorn was one. He was 29. Never mind that the German money manager had never climbed before. When the guide asked, Thieme lied, claiming he had climbed California's Mt. Whitney. "Which side?" Thieme fudged: "It wasn't the easy one." Yet once he was on the trail, Thieme became afraid and tried to escape by offering to escort an ailing woman back to safe ground. No such luck. Upon reaching the summit, Thieme prepared his speech: "Look, no matter how you do it--helicopter, whatever--get me down, I'm scared stiff." But he still had his pride--and threw caution to the winds for the difficult descent. At the bottom, Thieme fessed up. "For that, you didn't do too badly," he recalls the guide saying.

Now, 20 years later, the adventurer can claim a similar feat in the financial world. After spending a decade as Deutsche Bank's top U.S. equities strategist, advising thousands of bank customers on stock purchases, Thieme (pronounced TEE-muh) decided to try his own hand at stock picking. In 1990, he bought tiny, ailing American Heritage Fund. He finished 1990 poorly. But in 1991, his first full year of managing the fund, he racked up a 97% gain. That made American Heritage the year's No. 1 capital-appreciation fund and the fifth-best-performing fund overall, according to Lipper Analytical Securities Corp.

"Last year was spectacular," says Thieme. "But I will never--repeat, never--produce another 97% return." He grins: "It will either be more, or it'll be less." An irrepressible boaster, joker, contrarian, and outspoken observer of everything from economics to art, the 48-year-old German is about as far from the stereotype of a button-downed German banker as you can get. Working 100-hour weeks, occasionally sleeping on an office sofa when he's too tired to drive home to Stamford, Conn., Thieme not only manages American Heritage but keeps a half-dozen other projects going.

He manages $20 million in private money. He directs a $600 million pension-fund group in Seattle. And as consultant to Deutsche Bank Group, Thieme makes 24 speeches for the bank a year in addition to writing a chatty, bilingual newsletter, Viewpoint (Der Standpunkt), the German version of which Deutsche Bank distributes to customers. He writes a weekly "Letter from Wall Street" for Germany's Frankfurter Allgemeine Zeitung. For the past six years, Thieme has also run a free hotline in Germany that he updates daily with recorded economic analyses and investment tips. He still runs it--only now, he charges $1,000 per subscription.

But the job that makes Thieme scramble hardest is managing American Heritage. Money is pouring in. With assets of roughly $2 million through much of 1991, the success of the no-load fund has boosted assets to $26 million. So far this year, American Heritage is up 14.7%, and ranks No. 17, according to Lipper.

HIGH TURNOVER. Thieme squirms when people try to pin him down on the philosophy that won him such stellar results. "I don't like to be put in a box," he says. Some critics speculate that he had extraordinary access to initial public offerings through a Bear, Stearns & Co. broker who owns 10% of American Heritage. And "Heiko traded a lot," notes A. Michael Lipper of Lipper Analytical. Conservative managers may change 25% of their holdings in a year; Thieme's portfolio turnover ran around 600% in 1991.

Thieme calls the talk about Bear Stearns hogwash: American Heritage isn't even allowed to buy IPOs from Bear Stearns. The fund has done well with new issues--its Marvel Entertainment Group holding doubled in four months--but Thieme says only about 10% of the fund's appreciation came from IPOs. He admits he traded a lot but claims he's a value investor, not a technical trader. "I'm a fundamentalist, but I always have a price."

So while he saw value in biotech stocks in early 1991, once biotech mania set in, he got out. The same, he says, goes for consumer cyclicals such as RJR Nabisco Inc. and Philip Morris Cos., which he has sold and is waiting to buy on dips. The fund usually holds 25 to 50 stocks: about 60% in big-company issues and 40% in smaller ones.

Thieme in action is a one-man show. His office in Manhattan's Deutsche Bank building offers a spectacular view of St. Patrick's Cathedral, but it's a rare moment when Thieme gazes out. Yelling questions in German and English to a frenzied staff, he pulls away from his stock machine to schmooze by phone with an underwriter. He takes a call from his wife, Corinne, but puts her on hold to speak with a Mideast investor who wants him to build a new fund. Corinne disappears from the line, but Thieme is too busy exchanging greetings with a caller from Austria to notice. "Napoleon used to do 10 things at one time," he says. "I can only do five."

LAW DEGREE. Thieme's private life is just as packed. When not riding horses or skiing with his wife and three children, he pilots single-engine planes, and he has tried parachuting and soaring--high-altitude glider piloting--as well. After growing up in the medieval town of Goslar, he earned a law degree at the University of Hamburg. But he became entranced with economics while doing a doctoral thesis on securities law and dropped law to join the financial world. He worked at Wood McKenzie in Scotland and White, Weld & Co. in London before Deutsche Bank asked him to go to New York in 1979 to run its U.S. equities business.

Thieme's volubility on the subject of investment strategies earned him the nickname "our guru from Wall Street" inside the bank. Bank sources say he had many backers in top management, but his often contrarian views rubbed some at the conservative institution the wrong way and has kept the relationship strained. Andrew Dalski, a former bank colleague, says Thieme once told a business magazine that it would be smart to short the Germany Fund. Since that fund was sponsored by Deutsche Bank, "they weren't very happy about that remark," he recalls, adding: "In retrospect, Heiko was right."

Thieme's biggest concern these days is proving that last year's success wasn't a fluke. He says he's betting on a continued bull market powered by economic recovery and an ongoing surge of funds into equities, driven by low interest rates and increased savings. Thieme's solid 1991 results leave him with a little more room to breathe, he says. "I'm not hanging on desperately anymore. Now, I'd be happy if I could stay in the top 10%." That wouldn't be too bad--for a beginner.

      BIOTECHNOLOGY Grossly inflated last year, but has since
      corrected. Picks: Amgen, Immune Response. For riskier portfolios, Interferon 
      TELECOMMUNICATIONS "If you have enough money, buy every telephone company in 
      the world. The world needs telecommunications." Picks: AT&T and Telefonos de 
      Mexico. MTC Electronic is "risky" but could double this year
      COMPUTERS Will benefit from a recovery. IBM between 80 and 90 is an "absolute 
      buy," Unisys an attractive special situation
      INTEREST-RATE SENSITIVE J. P. Morgan; Citicorp is speculative
      CONSUMER CYCLICALS The consumer is "engine of the recovery." Picks: General 
      Motors, Ferrofluidics
      DATA: BW
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