Scoreboard: Heading North, for a Change

BARRON'S
Fund Scope:
Oberweis Funds
Oberweis Mid-Cap
800-245-7311
Total Returns*
1-Yr
3-Yr
5-Yr
OBMDX
-18.63
4.75
6.20
Russell 2500 Gr
-13.68
5.21
9.78
P2BW203007-0-W00700-2--------XA
FLIR Systems
Ticker
% Of
Portfolio**
FLIR
4.0%
Central European Dist
CEDC
3.6
Deckers Outdoor
DECK
3.5
Priceline.com
PCLN
3.5
ICON Plc
ICLR
3.3
Illumina
ILMN
2.9
VisionChina Media
VISN
2.9
GES
2.7
URBN
2.7
Guess
Urban Outfitters
Dolby Labs
Total:
DLB
2.5
31.6
907964_907995
Asset Management. (Employees own the
rest.)
Obviously, his aggressive approach isn’t
suitable for everyone. But as Morningstar
analyst Katherine Yang notes in a recent
report, Oberweis has demonstrated an
“ability to bounce back after difficult investing environments,” as underscored by the
fund’s 56% gain in 2003 after its 32.7% loss
during 2002’s bear market. Noting that
Oberweis favors rapidly growing small companies in early stages of their growth cycles, Yang adds: “Even though the fund’s
losses have been painful, we don’t think
they are red flags to sell.”
Oberweis says that his performance
faces a big headwind whenever value
stocks are in favor, as they have been.
“Paired with the reduced appetite for risk
that followed the credit crisis, we have
lived through the perfect storm for our investment process,” he says. “But while
painful in the short run, I strongly believe
that the stage is being set for a wonderful
rally for high- growth stocks.”
One company that fits his bill is semiconductor maker NetLogic (NETL), whose
chips are used to optimize routing in advanced networks. Trading recently at 18
times his forward estimate of $1.80 a share,
“NetLogic is undervalued, given our belief
that the firm can grow at 40%” a year.
The money manager notes that “technology has always been a core focus for our
fund. Smaller technology companies have
the opportunity to innovate and unsettle
zEquity-income funds have delivered miserable performance. Their average loss was 17.63% in the
12 months through Thursday, reports Lipper. Fidelity Equity Income, T. Rowe Price Equity Incomeand RiverSource Diversified Equity Income, among others, lost 20% or more during that span.
Fund Name/Manager
Phone Number
Load
Assets
(millions)
Fidelity Equity-Inc
Stephen S. Petersen
T Rowe Price Eq Inc
Brian C. Rogers
Fidelity Equity-Inc II
Robert Chow
RiverSource Dvsd E-I A
Team Managed
iShares Dow Sel Div Id
Leung/O'Connor
DWS Drem High Rtn A
Team Managed
Amer Cent Eq Inc Inv
Moore/Davidson/Toney
Allianz NFJ D Vl A
Team Managed
Hartfd Div & Gro A
Team Managed
Vanguard Equity Inc Inv
James P. Stetlet
800-544-8544
None
$25,954.8
800-638-5660
None
800-544-8544
1 Year
Return
– 24.16%
1.77%
17,348.4
– 20.10
2.30
None
8,268.3
– 21.05
0.61
888-791-3380
5.75
5,232.8
– 20.44
6.05
800-474-2737
None
4,781.8
– 28.65
– 4.25
800-621-1048
5.75
4,054.3
– 28.74
– 2.50
800-345-2021
None
3,477.5
– 13.86
3.16
800-426-0107
5.50
3,195.3
– 18.45
5.66
888-843-7824
5.50
2,949.2
– 14.08
6.19
800-662-7447
None
2,759.1
– 17.54
3.51
Source: Lipper
Heading North, for a Change
zU.S. diversified equity funds gained an average of 1.08% during the week ended Thursday,
according to Lipper, surpassing the S&P 500’s advance of 0.58%. Small-cap value and smallcap growth funds rose 3.20% and 2.18% respectively. Fnancial-services funds jumped 6.07%
and real-estate funds rose 3.10%. Among large funds, Dodge and Cox Stock climbed 1.69%.
U.S. STOCK FUNDS
U.S. BOND FUNDS
TOP SECTOR / Financial Services Funds
BOTTOM SECTOR / Natural Resources Funds
One Week
Year-to-Date
1.08%
– 1.10
6.07
– 5.99
– 11.66%
– 1.40
– 24.49
2.27
One Week
Year-to-Date
18.90%
17.09
16.63
14.22
13.25
13.04
12.64
12.43
12.34
12.33
– 40.90%
NA
– 2.19
– 15.42
– 16.24
NA
– 11.19
17.42
– 26.04
– 50.31
One Week
Year-to-Date
– 20.00%
– 19.19
– 17.57
– 15.77
– 15.08
– 14.41
– 11.47
– 11.34
– 10.77
– 10.49
– 85.34%
NA
38.76
NA
– 13.89
36.75
– 9.03
– 19.72
35.44
2.41
THE WEEK'S TOP 10
Fund
Investment Objective
ProFunds Banks Inv
Rydex Inv 2xS&P SSEngy
ProShares UlS OIl Gas
IShares Dow US Hme Cns
FocusShares HMBLD
Rydex 2x S&P SS Finl
SPDR S&P Homebuilders
ProShares UlS Util
Regional Bank HLDRS Tr
ProShares Ult Finl
Finl Services
DSB
DSB
CG
Specialty & Misc
Finl Services
CG
DSB
Finl Services
Finl Services
THE WEEK'S BOTTOM 10
Fund
Investment Objective
American Heritage Growth
Rydex Inv 2xS&P SSFinl
ProShares UlS Finl
Rydex 2x S&P SS Energy
ProShares Ult Oil & Gas
iPath ETN DJ-AIG NT GS A
ProFunds Oil & Gas Inv
ProShares Ult Util
iPath ETN DJ-AIG Enrgy A
PowerShares Dyn Enrgy
Multi Cap Core
DSB
DSB
Utility
Natural Resources
Specialty & Misc
GNR
Utility
Specialty & Misc
Natural Resources
THE LARGEST 10
Fund
American Funds Gro A
PIMCO Tot Rtn Inst
American Funds CIB A
American Funds CWGI A
Fidelity Contrafund
SPDR Trust 1
American Funds ICA A
American Funds Inc A
American Funds EuPc A
American Funds Wsh A
*Annualized. Through Thursday.
Net Assets
(billions) Investment Objective
$84.780
78.499
77.817
77.152
74.126
71.655
62.805
59.349
55.570
55.202
Multi Cap Growth
Intmd Inv Grade
MTAG
GMLV
Multi Cap Growth
S&P 500 Funds
Large Cap Value
MTAG
IMLG
Large Cap Value
3-Year*
Return
6.37%
4.95
7.86
12.08
9.30
2.79
3.64
4.19
14.08
2.54
7
Streetwise
3 Year
Return*
*Annualized. All data through Thursday.
Scoreboard:
BARRON'S
1-Week
Return
– 0.33%
– 1.49
– 0.91
0.23
– 0.25
0.58
0.28
– 0.21
0.11
0.59
Round-Trip Ruminations
by Michael Santoli
heavy trading volume during the turn higher, which was preceded by a nicely
years—the Long View Record, say—its business page last elevated number of new 52-week lows. A more qualitative improvement came
week might’ve reported, “Stocks finished flat on the decade, in the way stocks began trading on their own merits and demerits (positive
on a couple of financial bubbles and busts, one recession earnings rewarded, disappointments punished, for example) rather than as
(and maybe another), two-and-a-half presidential terms and collective manifestations of the macroeconomic and credit drama.
a streak of utter American League dominance of baseball.”
The fact, for example, that Merrill Lynch’s (MER) uglier-than-expected
Yes, at last week’s low of 1201 in the Standard & Poor’s quarter caused it to underperform other financials Friday, yet left the stock
500, reached Tuesday on the same old fears that the financial world was 24% above its weekly low, shows both investor sobriety and just how much
teetering toward extinction, the index was a mere sliver above the high of awful news had been priced in. A little-remarked but steady flow of corporate
1190 reached July 20, 1998, a moment when the market was
merger news is another hopeful straw in the wind.
about to suffer what seems, in retrospect and comparison, a
On the cautionary side, the way the market played to script
Funny the way
rather cute and cuddly financial crisis.
was a bit precious, as widely anticipated trigger levels of 1200 on
a market that’s
What of it? Well, for one thing, the recent clanging of pots
the S&P and 30 on the VIX options-sentiment indicator, once
and pans in the press about the “official” bear market has
gently kissed, ushered in the ferocious turnabout to the upside.
radically oversold
elicited a fresh round of declarations that we’re in the kind of
There are enough skeptics, and cash on the sidelines, to fuel
in the short term
purgatorial trading range that prevailed from the late-’60s to
further gains. Yet it would be encouraging if the market could,
early-’80s, featuring disappointing returns and zero net gains.
at some point, prove that it’s capable of rallying substantially in
is automatically
It’s tough to argue the point, given the broad stock-valuathe absence of either some government backstopping effort or a
tion, demographic and market-cycle context. But after a 10-year
sharp oil-price drop.
furnished with
round trip, that notion qualifies as mere observation rather
perfectly suitable
Oil refiners might be more despised today among investhan bold vision. And should we get so cozy with such epochal
tors than environmentalists. With margins trapped between
forecasts, considering that in July 1998 approximately no one
excuses to rally.
rising crude prices and ebbing domestic gasoline demand, Wall
was projecting zero net gains over the next decade?
Street has abandoned the likes of Valero Energy (VLO) and
The path to those disappointing returns matters a great deal
Sunoco (SUN). An analyst at Sanford Bernstein threw in the
to those active in the markets, given that, say, a 20% jump or
drop from here would do little to alter the range-bound market thesis. towel Friday on his formerly bullish call with a downgrade of the group.
The stocks ticked up modestly with the crude correction, but not enough
Which brings us to last week’s reversal into the green.
Funny the way a market that’s radically oversold in the short term is to suggest that many investors care that Valero trades a six times depressed
earnings and 30% of replacement value. Going unnoticed, aside from its
furnished with perfectly suitable excuses to rally.
Government officials reiterated they wouldn’t allow the financial system cheapness (see “Time to Fill ’Er Up at Valero,” April 14) is the recent
to go to zero and would shoo certain bears away from financial stocks. Oil strength in heating oil and diesel margins, and Valero’s advantaged ability to
confronted a challenging mix of supply, demand and geopolitical headlines to process sour-grade oils—not to mention management’s shrewd capital-allocaenter a meaty pullback. Several big companies (General Motors and a jail- tion and asset-shuffling moves. A further drop in crude would help the
house lineup of banks, for instance) persuaded investors that if they were refinery stocks, but it’s possible that even sideways action in crude would
eventually to go out of business, it might be later rather than sooner. That help crack through the gloom pervading the group. n
was plenty for a 5% pop from the weekly low.
Reviewing the market action for style points, the positives include pretty e-mail: [email protected]
IF YOUR COMMUNITY NEWSPAPER PUBLISHED ONCE IN 10
YTD
Return
– 10.06%
1.26
– 9.97
– 12.07
– 10.73
– 13.17
– 12.86
– 10.29
– 12.58
– 13.08
Source: Lipper
> The RBC Bottom Line
A Leading Corporate and Investment Bank. Delivering Results.
Alternative Assets | Commodities | Credit | Debt | Equity | Foreign Exchange | Investment Banking
www.rbccm.com | 1.888.886.8296
Not intended as a solicitation for the purchase or sale of any financial instruments. RBC Capital Markets is the brand name of the capital markets business of the Royal Bank of Canada including RBC Capital Markets Corporation, member of www.FINRA.org, NYSE and SIPC.
P2BW203007-0-W00700-2-------
BLACK
*As of 7/16. 3-year and 5-year annualized.
**As of 6/30.
Sources: Morningstar; Oberweis Funds
Back of the Pack
July 21, 2008
EE,EU,MW,NL,SW,WE
Top 10 Holdings
larger incumbents.” Among his other tech
picks are Anadigics (ANAD), Omniture
(OMTR), Synaptics (SYNA), Ansys
(ANSS), CyberSource (CYBS), and
Atheros Communications (ATHR).
Oberweis is also a big fan of Intuitive
Surgical (ISRG), which he first purchased
in July 2005; his fund’s average share of
Intuitive is up about 285%. Intuitive Surgical developed the minimally invasive da
Vinci robotic surgery system, particularly
popular for prostate removal. A surgeon
sitting at a computer guides tiny robotic
arms, equipped with cameras that transmit
magnified images, making the operation
more precise. More hospitals are buying
the $1.6 million systems, Oberweis says. In
addition, he notes, recurring revenue from
installed surgical supplies continues to
climb, and the system is increasingly being
adopted for new procedures. Both revenue
and profits are growing strongly, he says,
justifying the company’s high P/E, now 51
times this year’s expected $5.46 a share in
earnings, and recent stock price of 278.
Another selection, Illumina (ILMN),
makes expensive gene-sequencing machines, along with the reagents they use.
These are sold to research labs and clinical
trial organizations to facilitate “personalized medicine,” by testing the efficacy of
various drugs on people with slight genetic
differences. While competitors offer partial
systems, Oberweis believes that Illumina
“has brought together the broadest array
of genetic analysis technologies under one
roof.” In the first quarter, revenue rose
69%, to about $122 million, while net came
in at 21 cents a share, versus a year-earlier
loss attributable to a one-time charge.
Another of the portfolio chief’s favorites, Nuance Communications (NUAN)
creates speech-recognition and image-digitalization tools. Its shares came under pressure recently, following the pricing of a 5.6
million-share offering. “Organic growth
was a little slower than we’d like this past
quarter, but management expects a better
second half of the year,” Oberweis says.
He also likes Flir Systems (FLIR),
which makes thermal-imaging and infaredcamera systems for the commercial, industrial and government markets. In the first
quarter, the company had $237 million in
revenue, up 47% from the year-earlier total, versus a forecast of $218 million.
“They have a record backlog, and
posted a 33% profit increase this past
quarter. We suspect that analyst estimates continue to be too low,” Oberweis
says. “We expect earnings of $1.45, versus a consensus estimate of $1.21.” And
profits could grow at 50% annually for
some time, he adds. n
July 21, 2008
P2BW203007-0-W00700-2--------XA
BLACK
07/21/2008
38
BARRON'S
Fund Scope:
Oberweis Funds
Oberweis Mid-Cap
800-245-7311
Total Returns*
1-Yr
3-Yr
5-Yr
OBMDX
-18.63
4.75
6.20
Russell 2500 Gr
-13.68
5.21
9.78
P2BW203007-0-W00700-2--------XA
FLIR Systems
Ticker
% Of
Portfolio**
FLIR
4.0%
Central European Dist
CEDC
3.6
Deckers Outdoor
DECK
3.5
Priceline.com
PCLN
3.5
ICON Plc
ICLR
3.3
Illumina
ILMN
2.9
VisionChina Media
VISN
2.9
GES
2.7
URBN
2.7
Guess
Urban Outfitters
Dolby Labs
Total:
DLB
2.5
31.6
907964_907995
Asset Management. (Employees own the
rest.)
Obviously, his aggressive approach isn’t
suitable for everyone. But as Morningstar
analyst Katherine Yang notes in a recent
report, Oberweis has demonstrated an
“ability to bounce back after difficult investing environments,” as underscored by the
fund’s 56% gain in 2003 after its 32.7% loss
during 2002’s bear market. Noting that
Oberweis favors rapidly growing small companies in early stages of their growth cycles, Yang adds: “Even though the fund’s
losses have been painful, we don’t think
they are red flags to sell.”
Oberweis says that his performance
faces a big headwind whenever value
stocks are in favor, as they have been.
“Paired with the reduced appetite for risk
that followed the credit crisis, we have
lived through the perfect storm for our investment process,” he says. “But while
painful in the short run, I strongly believe
that the stage is being set for a wonderful
rally for high- growth stocks.”
One company that fits his bill is semiconductor maker NetLogic (NETL), whose
chips are used to optimize routing in advanced networks. Trading recently at 18
times his forward estimate of $1.80 a share,
“NetLogic is undervalued, given our belief
that the firm can grow at 40%” a year.
The money manager notes that “technology has always been a core focus for our
fund. Smaller technology companies have
the opportunity to innovate and unsettle
zEquity-income funds have delivered miserable performance. Their average loss was 17.63% in the
12 months through Thursday, reports Lipper. Fidelity Equity Income, T. Rowe Price Equity Incomeand RiverSource Diversified Equity Income, among others, lost 20% or more during that span.
Fund Name/Manager
Phone Number
Load
Assets
(millions)
Fidelity Equity-Inc
Stephen S. Petersen
T Rowe Price Eq Inc
Brian C. Rogers
Fidelity Equity-Inc II
Robert Chow
RiverSource Dvsd E-I A
Team Managed
iShares Dow Sel Div Id
Leung/O'Connor
DWS Drem High Rtn A
Team Managed
Amer Cent Eq Inc Inv
Moore/Davidson/Toney
Allianz NFJ D Vl A
Team Managed
Hartfd Div & Gro A
Team Managed
Vanguard Equity Inc Inv
James P. Stetlet
800-544-8544
None
$25,954.8
800-638-5660
None
800-544-8544
1 Year
Return
– 24.16%
1.77%
17,348.4
– 20.10
2.30
None
8,268.3
– 21.05
0.61
888-791-3380
5.75
5,232.8
– 20.44
6.05
800-474-2737
None
4,781.8
– 28.65
– 4.25
800-621-1048
5.75
4,054.3
– 28.74
– 2.50
800-345-2021
None
3,477.5
– 13.86
3.16
800-426-0107
5.50
3,195.3
– 18.45
5.66
888-843-7824
5.50
2,949.2
– 14.08
6.19
800-662-7447
None
2,759.1
– 17.54
3.51
Source: Lipper
Heading North, for a Change
zU.S. diversified equity funds gained an average of 1.08% during the week ended Thursday,
according to Lipper, surpassing the S&P 500’s advance of 0.58%. Small-cap value and smallcap growth funds rose 3.20% and 2.18% respectively. Fnancial-services funds jumped 6.07%
and real-estate funds rose 3.10%. Among large funds, Dodge and Cox Stock climbed 1.69%.
U.S. STOCK FUNDS
U.S. BOND FUNDS
TOP SECTOR / Financial Services Funds
BOTTOM SECTOR / Natural Resources Funds
One Week
Year-to-Date
1.08%
– 1.10
6.07
– 5.99
– 11.66%
– 1.40
– 24.49
2.27
One Week
Year-to-Date
18.90%
17.09
16.63
14.22
13.25
13.04
12.64
12.43
12.34
12.33
– 40.90%
NA
– 2.19
– 15.42
– 16.24
NA
– 11.19
17.42
– 26.04
– 50.31
One Week
Year-to-Date
– 20.00%
– 19.19
– 17.57
– 15.77
– 15.08
– 14.41
– 11.47
– 11.34
– 10.77
– 10.49
– 85.34%
NA
38.76
NA
– 13.89
36.75
– 9.03
– 19.72
35.44
2.41
THE WEEK'S TOP 10
Fund
Investment Objective
ProFunds Banks Inv
Rydex Inv 2xS&P SSEngy
ProShares UlS OIl Gas
IShares Dow US Hme Cns
FocusShares HMBLD
Rydex 2x S&P SS Finl
SPDR S&P Homebuilders
ProShares UlS Util
Regional Bank HLDRS Tr
ProShares Ult Finl
Finl Services
DSB
DSB
CG
Specialty & Misc
Finl Services
CG
DSB
Finl Services
Finl Services
THE WEEK'S BOTTOM 10
Fund
Investment Objective
American Heritage Growth
Rydex Inv 2xS&P SSFinl
ProShares UlS Finl
Rydex 2x S&P SS Energy
ProShares Ult Oil & Gas
iPath ETN DJ-AIG NT GS A
ProFunds Oil & Gas Inv
ProShares Ult Util
iPath ETN DJ-AIG Enrgy A
PowerShares Dyn Enrgy
Multi Cap Core
DSB
DSB
Utility
Natural Resources
Specialty & Misc
GNR
Utility
Specialty & Misc
Natural Resources
THE LARGEST 10
Fund
American Funds Gro A
PIMCO Tot Rtn Inst
American Funds CIB A
American Funds CWGI A
Fidelity Contrafund
SPDR Trust 1
American Funds ICA A
American Funds Inc A
American Funds EuPc A
American Funds Wsh A
*Annualized. Through Thursday.
Net Assets
(billions) Investment Objective
$84.780
78.499
77.817
77.152
74.126
71.655
62.805
59.349
55.570
55.202
Multi Cap Growth
Intmd Inv Grade
MTAG
GMLV
Multi Cap Growth
S&P 500 Funds
Large Cap Value
MTAG
IMLG
Large Cap Value
3-Year*
Return
6.37%
4.95
7.86
12.08
9.30
2.79
3.64
4.19
14.08
2.54
7
Streetwise
3 Year
Return*
*Annualized. All data through Thursday.
Scoreboard:
BARRON'S
1-Week
Return
– 0.33%
– 1.49
– 0.91
0.23
– 0.25
0.58
0.28
– 0.21
0.11
0.59
Round-Trip Ruminations
by Michael Santoli
heavy trading volume during the turn higher, which was preceded by a nicely
years—the Long View Record, say—its business page last elevated number of new 52-week lows. A more qualitative improvement came
week might’ve reported, “Stocks finished flat on the decade, in the way stocks began trading on their own merits and demerits (positive
on a couple of financial bubbles and busts, one recession earnings rewarded, disappointments punished, for example) rather than as
(and maybe another), two-and-a-half presidential terms and collective manifestations of the macroeconomic and credit drama.
a streak of utter American League dominance of baseball.”
The fact, for example, that Merrill Lynch’s (MER) uglier-than-expected
Yes, at last week’s low of 1201 in the Standard & Poor’s quarter caused it to underperform other financials Friday, yet left the stock
500, reached Tuesday on the same old fears that the financial world was 24% above its weekly low, shows both investor sobriety and just how much
teetering toward extinction, the index was a mere sliver above the high of awful news had been priced in. A little-remarked but steady flow of corporate
1190 reached July 20, 1998, a moment when the market was
merger news is another hopeful straw in the wind.
about to suffer what seems, in retrospect and comparison, a
On the cautionary side, the way the market played to script
Funny the way
rather cute and cuddly financial crisis.
was a bit precious, as widely anticipated trigger levels of 1200 on
a market that’s
What of it? Well, for one thing, the recent clanging of pots
the S&P and 30 on the VIX options-sentiment indicator, once
and pans in the press about the “official” bear market has
gently kissed, ushered in the ferocious turnabout to the upside.
radically oversold
elicited a fresh round of declarations that we’re in the kind of
There are enough skeptics, and cash on the sidelines, to fuel
in the short term
purgatorial trading range that prevailed from the late-’60s to
further gains. Yet it would be encouraging if the market could,
early-’80s, featuring disappointing returns and zero net gains.
at some point, prove that it’s capable of rallying substantially in
is automatically
It’s tough to argue the point, given the broad stock-valuathe absence of either some government backstopping effort or a
tion, demographic and market-cycle context. But after a 10-year
sharp oil-price drop.
furnished with
round trip, that notion qualifies as mere observation rather
perfectly suitable
Oil refiners might be more despised today among investhan bold vision. And should we get so cozy with such epochal
tors than environmentalists. With margins trapped between
forecasts, considering that in July 1998 approximately no one
excuses to rally.
rising crude prices and ebbing domestic gasoline demand, Wall
was projecting zero net gains over the next decade?
Street has abandoned the likes of Valero Energy (VLO) and
The path to those disappointing returns matters a great deal
Sunoco (SUN). An analyst at Sanford Bernstein threw in the
to those active in the markets, given that, say, a 20% jump or
drop from here would do little to alter the range-bound market thesis. towel Friday on his formerly bullish call with a downgrade of the group.
The stocks ticked up modestly with the crude correction, but not enough
Which brings us to last week’s reversal into the green.
Funny the way a market that’s radically oversold in the short term is to suggest that many investors care that Valero trades a six times depressed
earnings and 30% of replacement value. Going unnoticed, aside from its
furnished with perfectly suitable excuses to rally.
Government officials reiterated they wouldn’t allow the financial system cheapness (see “Time to Fill ’Er Up at Valero,” April 14) is the recent
to go to zero and would shoo certain bears away from financial stocks. Oil strength in heating oil and diesel margins, and Valero’s advantaged ability to
confronted a challenging mix of supply, demand and geopolitical headlines to process sour-grade oils—not to mention management’s shrewd capital-allocaenter a meaty pullback. Several big companies (General Motors and a jail- tion and asset-shuffling moves. A further drop in crude would help the
house lineup of banks, for instance) persuaded investors that if they were refinery stocks, but it’s possible that even sideways action in crude would
eventually to go out of business, it might be later rather than sooner. That help crack through the gloom pervading the group. n
was plenty for a 5% pop from the weekly low.
Reviewing the market action for style points, the positives include pretty e-mail: [email protected]
IF YOUR COMMUNITY NEWSPAPER PUBLISHED ONCE IN 10
YTD
Return
– 10.06%
1.26
– 9.97
– 12.07
– 10.73
– 13.17
– 12.86
– 10.29
– 12.58
– 13.08
Source: Lipper
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*As of 7/16. 3-year and 5-year annualized.
**As of 6/30.
Sources: Morningstar; Oberweis Funds
Back of the Pack
July 21, 2008
EE,EU,MW,NL,SW,WE
Top 10 Holdings
larger incumbents.” Among his other tech
picks are Anadigics (ANAD), Omniture
(OMTR), Synaptics (SYNA), Ansys
(ANSS), CyberSource (CYBS), and
Atheros Communications (ATHR).
Oberweis is also a big fan of Intuitive
Surgical (ISRG), which he first purchased
in July 2005; his fund’s average share of
Intuitive is up about 285%. Intuitive Surgical developed the minimally invasive da
Vinci robotic surgery system, particularly
popular for prostate removal. A surgeon
sitting at a computer guides tiny robotic
arms, equipped with cameras that transmit
magnified images, making the operation
more precise. More hospitals are buying
the $1.6 million systems, Oberweis says. In
addition, he notes, recurring revenue from
installed surgical supplies continues to
climb, and the system is increasingly being
adopted for new procedures. Both revenue
and profits are growing strongly, he says,
justifying the company’s high P/E, now 51
times this year’s expected $5.46 a share in
earnings, and recent stock price of 278.
Another selection, Illumina (ILMN),
makes expensive gene-sequencing machines, along with the reagents they use.
These are sold to research labs and clinical
trial organizations to facilitate “personalized medicine,” by testing the efficacy of
various drugs on people with slight genetic
differences. While competitors offer partial
systems, Oberweis believes that Illumina
“has brought together the broadest array
of genetic analysis technologies under one
roof.” In the first quarter, revenue rose
69%, to about $122 million, while net came
in at 21 cents a share, versus a year-earlier
loss attributable to a one-time charge.
Another of the portfolio chief’s favorites, Nuance Communications (NUAN)
creates speech-recognition and image-digitalization tools. Its shares came under pressure recently, following the pricing of a 5.6
million-share offering. “Organic growth
was a little slower than we’d like this past
quarter, but management expects a better
second half of the year,” Oberweis says.
He also likes Flir Systems (FLIR),
which makes thermal-imaging and infaredcamera systems for the commercial, industrial and government markets. In the first
quarter, the company had $237 million in
revenue, up 47% from the year-earlier total, versus a forecast of $218 million.
“They have a record backlog, and
posted a 33% profit increase this past
quarter. We suspect that analyst estimates continue to be too low,” Oberweis
says. “We expect earnings of $1.45, versus a consensus estimate of $1.21.” And
profits could grow at 50% annually for
some time, he adds. n
July 21, 2008
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