Monday June 05, 2000 (10:56 am ET)
Fund Whiz Alberto Vilar: The Net-Stock
Boom Is Just Beginning
And he's putting investors' money where his mouth is with his
new Internet B2B Fund
By David Shook, Business Week Online
NEW YORK, Jun. 05 (Business Week Online ) - Billionaire money
manager Alberto Vilar often correctly predicts the direction of the
market. So, when he says e-commerce stocks still have huge
untapped potential, some observers might think he's spending too
much time at the opera, his favorite pastime.
But, if anything, Vilar is probably watching the market even more
closely than usual. A star institutional investor for 30 years, Vilar has
managed a single mutual fund -- the top-rated Amerindo Technology
Fund -- since 1996. Now, Vilar is in the midst of launching two new
funds -- the Health & Biotechnology Fund and the Internet B2B Fund.
Given Vilar's record, either of these funds has the potential to really
take off. But the one to watch may be his Internet B2B Fund, launched
May 30. Focusing the fund on business-to-business Net stocks is a
daring move because B2B stocks fell off a cliff last year and still
haven't recovered. Vilar isn't fazed. "We think the Internet will be the
largest business and investment opportunity in history -- larger than
the Industrial Revolution," he said at a conference a few days ago.
"This sector is so explosive. It looks to us as though we're still very,
very early. What we see in five years will make the present seem like
a quaint anachronism."
"Top of the line"
If Vilar is right, the Internet B2B Fund could turn out to be a very hot
investment. Even now, only a few dozen pure Net funds exist, plus a
handful more under registration. And few fund managers have done a
better job of picking Net stocks than Vilar. He made a fortune for
investors by getting into Cisco, Microsoft, Yahoo!, and Amazon during
their infancy. After a rocky start (the fund was down 18% in 1997), the
Technology Fund was up 85% in 1998 and a phenomenal 248% last
year. "His track record is definitely top of the line," says Ramy
Shaalan, mutual-fund analyst for Wiesenberger Thomson Financial.
Vilar, 60, also has a long history of calling key turning points in the
market. Born in Cuba, he fled to Puerto Rico with his family when
Castro came to power in 1959. He eventually landed in the U.S and
started Amerindo in 1980. He has always been a top fund manager,
but he really came into his own with the rise of the Internet. One of the
first managers to invest heavily in Net stocks, he now divides his time
among the company's New York, San Francisco, and London offices.
Among his key market calls, he predicted the correction in the tech
sector in the spring of 1999. In April, 1999, he reduced his stock
holdings and raised the cash portion of his portfolio for several
months. As a result, according to mutual-fund researcher
Morningstar, Amerindo Technology Fund only lost 2% from May
through July of that year, while other hot Net funds tanked big-time.
Then, in a December interview with Business Week Online, Vilar
correctly predicted this year's correction in Net stocks (see Street
Wise, 12/15/99, "This Internet Bull Is Preparing for a (Temporary)
Bust"). His tech fund has taken a beating anyway: It was down 42%
as of the beginning of June, according to Morningstar.
Too concentrated?
Vilar's new fund may be even riskier, given that it'll be focused solely
on volatile e-commerce stocks. Vilar buys only 20 to 30 stocks for his
funds, making them highly concentrated and more sensitive to risk
and return on individual holdings. Analyst Scott Cooley of Morningstar
says Vilar's B2B fund seems unnecessarily concentrated. "I don't
think focusing on a sub-sector of the Internet makes sense. It just
becomes riskier," he says. But he's not willing to rule it out altogether:
"If anybody deserves the benefit of the doubt, Vilar does. The guy has
been right so many times before."
Clearly, this isn't a fund for the faint-of-heart. But if you want to take a
flier on Internet B2B, you won't find many better pilots than Alberto
Vilar.
05-Jun-2000 10:56:59 (02819242) Copyright 2000 Standard & Poor's Investment
Advisory Services LLC. The information contained in this report may not be
published, broadcast, rewritten or otherwise distributed without prior written
consent from Standard & Poor's.
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