T. Rowe Price whiz feted for 55% year New Horizons chief: John Laporte was "totally surprised" to learn that a newsletter had named him the nation's best domestic fund manager.

February 01, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

If John H. Laporte played for the Orioles, he would be celebrated across the land as the American League's Most Valuable Player for 1995.

But Mr. Laporte isn't a hulking home run hitter or a lightning fast base stealer. He's a wiry, bespectacled mutual fund manager for Baltimore's T. Rowe Price Associates Inc., who has been named domestic stock fund manager of the year by Morningstar Mutual Funds, a respected industry newsletter. Mr. Laporte, 50, was tapped over thousands of other candidates after his New xTC Horizons Fund floored the competition with a jaw-dropping 55.44 percent return for 1995.

The fund, which has $2.85 billion in assets under management, beat the Lipper Small Company Fund Index, which returned 31.4 percent for 1995; the Nasdaq composite, 39.9 percent; and the Standard & Poor's 500 stock-index, 37.6 percent.

"The job he [Mr. Laporte] has done with New Horizons, he should be manager of the decade," said Bill Miller, who manages three mutual funds for Baltimore-based Legg Mason Inc.

Mr. Laporte wins the award at a time when investors are pumping billions of dollars into mutual funds. Last year alone, they invested $129 billion in stock mutual funds.

As mutual funds increasingly become the investment vehicles of choice for millions of middle-class Americans, fund managers such as Mr. Laporte are becoming highly paid superstars.

Some mutual fund managers can make as much as $3 million a year.

There are other perks, too, of course.

Investment guru Peter Lynch, who used to manage Fidelity Magellan and was also a Morningstar manager of the year, has written widely quoted books and has appeared in commercials as well as in scores of financial articles.

The New Horizons fund was formed more than 30 years ago and is one of T. Rowe Price's oldest.

It invests in companies that have market capitalization values of less than $1 billion.

In 1995, New Horizons' holdings exploded, growing by 72 percent over 1994, while the number of shareholder accounts jumped 35 percent to 87,200.

Interestingly, New Horizons ran a dead heat with T. Rowe's red-hot Science & Technology Fund, run by Charles A. Morris. Investors devoured technology stocks, and Mr. Morris' fund returned 55.53 percent for the year.

Shortly before technology stocks lost favor with investors late in the year, Mr. Laporte reduced his fund's 24 percent stake in tech stocks and put the money into health care, and those stocks responded well.

Preston Athey, who manages T. Rowe Price's Small-Cap Value Fund, said managing such a large fund is tricky business because managers must have more than one or two stocks that are good performers.

"To out-perform as much as he did shows he had a lot more than good ideas," Mr. Athey said. "It is knowing which [stocks] are good enough to really put your money behind.

"A really good investor has the courage of their conviction. Jack is willing to put his money where his convictions are."

"I was totally surprised," said Mr. Laporte, in between harried phone calls to traders. "I had no idea. I am very flattered."

Amy Arnott, editor of Morningstar Mutual Funds, said executives of the Chicago-based publishing company were impressed by Mr. Laporte's "courage" and "discipline," especially when it came to managing technology stocks.

"Unlike a lot of other small company funds, he did not have this huge weighting in technology stocks," she said. "It shows that he is not just trying to get into the latest trendy area."

They were also impressed by New Horizons' performance. Over the last five years, the fund has had a total return of 220 percent. In other words, a $10,000 investment in New Horizons in 1990 would be worth $32,000 today.

"I think that he has shown that the fund is not a one-hit wonder," Ms. Arnott said.

Mr. Laporte graduated with a political science degree from Princeton University in 1967 and received his MBA from Harvard in 1969.

After working for a small brokerage firm in New York, he joined T. Rowe Price in 1976 as a research analyst and became director of research six years later. In 1987, three weeks before the stock market crashed, Mr. Laporte took over New Horizons.

"It was a really nerve-racking and scary experience," said Mr. Laporte.

New Horizons' returns fell 26 percent the first quarter that Mr. Laporte managed the fund, he said.

"For my first three years running the fund, I was kind of going into a head wind," he said.

But the head winds subsided with more favorable markets and some savvy stock picking by Mr. Laporte and his team of five advisers.

Shortly after the crash, Mr. Laporte scooped up shares of Home Depot Inc., which had been beaten down by the lousy market, said Brian Berghuis, one of New Horizon's advisers and manager of Mid-Cap Growth Fund. Mr. Laporte sold the stock several years ago, but by that time it had paid hefty returns to New Horizons.

He also snapped up Blockbuster Entertainment and CUC International Inc., and both of them have been big winners for the fund, Mr. Berghuis said.

"He's a very quick study of companies," Mr. Berghuis said. "He can meet with a company for an hour or an hour-and-a-half and he has a very good idea when he walks out of the meeting in his mind whether they have big potential or not."

Mr. Laporte doesn't like to take credit for New Horizons' success; rather, he heaps it on his advisers and 27 research analysts who help him zero in on promising companies.

"There is no way one person alone can stay on top of 300 companies," he said. "We have a very powerful team."

Mr. Laporte expects New Horizons to keep churning out gains of about 25 percent a year over the next three to five years. But matching 1995's performance is out of reach, he said.

"I won't do it," Mr. Laporte said. "I am not naive enough to expect to deliver that kind of performance any time soon."

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