After surviving a stock market free fall last year, U.S. money managers faced a topsy-turvy start to 2009 before a formidable spring rally.
One of the standouts this year has been T. Rowe Price's Joseph Milano, who has been managing the New America Growth Fund since 2002. While the fund lost 38.3 percent last year, it still bested 67 percent of its peers in its large-growth category, according to Morningstar. The fund's three-year and five-year returns are also impressive, outperforming 95 percent and 85 percent of its peer funds, respectively.
Morningstar recently picked New America Growth as one of five funds that have "surfed 2009's wild waves well." During last fall's financial meltdown, Milano took advantage of bargain prices to add to his stake in Apple and Whole Foods Market while snapping up Priceline.com and aerospace company Goodrich. All those picks helped boost his fund this year.
Milano is one of six early contenders for Morningstar's domestic stock manager of the year, according to a preliminary list of favorites released last week. For the year through Aug. 31, his fund has gained 33.9 percent, putting it near the top of the pack.
The Baltimore Sun recently spoke with Milano at his downtown Baltimore office about the financial crisis, the impact on his management strategy and opportunities in this environment. Before taking the helm of the New America Growth Fund, Milano was a research analyst at Price. He joined the Baltimore firm in 1996.
"Whether it's consumer, health care, technology or energy, I almost think it doesn't matter what sector, my view over the next X number of years is that the market will get a lot more selective," Milano said. "I'm very much thinking stock-specific in a bigger way than I've ever had."
Question: : How do you manage a growth fund during a recession?
Answer: : I run it like I always run it. I'm still looking for high-quality companies that can grow long term. Like most people here, I'm not necessarily looking for a company that grows at a certain rate every single year. What I'm more interested in is finding a company that I could own for several years and could grow over a multiyear period.
Question: : What do you look for when you pick a stock?
Answer: : I'm looking for companies that can grow revenues faster than let's say the economy can grow. If the economy is growing 3 percent over time, I want companies that can grow 5 [percent] to 10 [percent]. ... If you could find a company that is growing faster than the economy on the top line and has an expanding [profit] margin, both of those bode well for earnings growth.
