Portfolio Manager Perspectives

Jeff Benjamin

Market sweet spot? Mid-caps, says Baron Opportunity's Lippert

Fund manager concentrates on a handful of broad themes that are generally applied to midsize companies

Aug 2, 2010 @ 7:28 pm

By Jeff Benjamin

You can always find secular-growth stories and investment opportunities — regardless of the market and economic conditions — according to Mike Lippert, manager of the $200 million Baron Opportunity Fund Ticker:(BIOPX).

“There is no slowdown among companies that are innovating,” he added.

Mr. Lippert concentrates on a handful of broad themes that are generally applied to midsize companies – that is, businesses with market capitalizations between $1 billion and $10 billion.

“Mid-cap is a great place to invest because these companies have graduated from being small businesses and made it through the risky phase,” he said. “As mid-caps, they are usually hitting inflexion points where they are well-capitalized, have positive cash flow and earnings.”

The general objective of the strategy is to invest in companies that are driving or benefitting from innovation.

“We're looking for businesses with secular-growth prospects, and we try to avoid cyclical businesses,” he said. “We want companies that are going to be able to double their stock price in four or five years.”

The portfolio is made up of about 60% mid-cap stocks, with 20% large-caps and 20% small-caps.

Some of bigger names in the fund are Amazon.com Inc. Ticker:(AMZN), Apple Inc. Ticker:(AAPL), Google Inc. Ticker:(GOOG) and Qualcomm Inc. Ticker:(QCOM).

Apple is a classic example of a stock for this strategy, with its popular iPhone “completely transforming the company,” Mr. Lippert said.

In the health care space, Intuitive Surgical Inc. Ticker:(ISRG) is a leading innovator, with its robotic surgical device that increases the efficiency and recovery of several common medical procedures.

Carbo Ceramics Inc. Ticker:(CRR) fits into the energy theme as a company that has the ability to exploit shale formations for oil and natural-gas drilling and exploration.

Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives.

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