In terms of quality, we're looking at things like strong balance sheets and good cash flows and strong management. I'm attracted to companies that are well-managed because at times like these, they keep you out of trouble.
Question: : Amid the financial meltdown last fall, did you tweak your strategy?
Answer: : No, I really didn't. ... The thing that felt really different to me in the fall: valuation. As a growth investor, valuation is not the first thing I look at. But I do look at it. It's part of my process. ... As a kid, I collected baseball cards. I wish I could go back in time to know that the Mickey Mantle rookie card is going to be worth what it's worth today. I would have bought a lot of those. In the fall, I had deja vu. I had a chance to go back in time. ... It almost felt too good to be true - that I was able to buy some of these great companies at 65 percent off sales, basically.
Question: : What are your thoughts on growth prospects for the consumer sector, given that consumers are changing their spending habits?
Answer: : The consumer is going to spend, but they're going to get more choosy. ... Theme No. 1 in consumers is, if you have a company with a me-too product and there are five companies selling it and there isn't that much differentiation, that might have worked in the last five years. But it's not going to work in the next five.
The second thing is value orientation. People want deals. ... They're going to go to Wal-Mart to buy the $1,500 LCD TV instead of buying at Best Buy and spending $1,900 on the same exact TV.
Question: : Health care stocks make up nearly 19 percent of your portfolio. What role will the health care reform play in how you manage your fund?
Answer: : Something is going to happen. And it's probably not going to be as bad people think. .... Both sides will get something. And we'll have reform, and it doesn't mean I should shun it. ... Part of health care reform is to digitize health care. That's an opportunity. I own a company called Cerner, which sells IT systems to hospitals. In pharmacy benefit management, Medco Health is one of my largest positions. They're an enabler of generic drugs, which are cheaper for the health care system.
Not all 19 percent of my funds are vulnerable in the health care reform debate. There is a component that is vulnerable, but a component where there is opportunity.
Question: : What is your outlook for the rest of the year?
Answer: : If I had to choose between being a very bullish or very bearish, I would be very bullish.
You know how I judge this question? I judge this question by looking at my portfolio. When I come into work everyday wanting to buy stuff, it makes me feel like I should be bullish because it tells me a broad swath of companies is attractive. ... I feel like stocks are pretty attractive. ... What I've been saying consistently is, I think anybody who's investing and expecting a tail wind from the economy will be disappointed. But I think there is going to be a normalization phase. I think we are going to get some growth. ... We're going to get growth by the end of this year and early next year. Companies are feeling a little more confident, credit is flowing a little bit better.
