Back in 2007, one of my favorite money managers, Ken Heebner, was up +80% for the year while the S&P 500 was only up +3.5%. How did he do it? He was concentrated in the best stocks from the strongest sectors. I remember it well because I was focused on the same stocks and I was up +72% that year. Some will argue that he gave a great deal of his gains back, but that is because he runs a long-only mutual fund where he has to stay fully invested at all times. Not all active managers have the same mandate.
So far, this year is shaping out to be the same. The major averages have basically moved sideways, but many individual stocks are beating to their own drum. For example, Netflix, Skechers and Bluebird Bio have already doubled. I don’t think the indexes will see a prolonged decline this year, mainly because too many people need it or want it to happen. I also don’t think we will see significant upside, mainly because we still need to digest the gains of 2013-14.
After getting bashed for the past 2 years, I think 2015 will be a breakout year for active managers. Managers who have strong stock picking abilities and conviction in their ideas can really shine in this type of environment. I currently own 3 stocks for my clients that I think can double over the next 6-12 months.
Therefore, I am opening my managed accounts product for the next 3 weeks (until July 3rd) because I want to take advantage of conditions that are favorable to my style. If you are an accredited investor and seriously interested in a passionate money manager, please email me to setup a consultation: jfahmy@zorcapital.com.
Stocks discussed in this POST: $BLUE $NFLX $SKX