Even in the rocky world of technology investing, the debt ceiling debate has been an eye-opening experience and has required some portfolio adjustments, according to Kevin Landis, manager of the Firsthand Technology Opportunities Fund Ticker:(TEFQX).
“I can't recall a time when I've been more nervously looking over my shoulder,” he said.
Under “normal circumstances,” Mr. Landis said, having “better positions will be enough to compete with our peer group.”
Lately, however, with Washington lawmakers pushing the country to the brink of credit downgrades and potential default, Mr. Landis has been adding some “low-beta positions” and has built up a 20% cash weighting in the fund.
On the low-beta side, he is holding shares of Microsoft Corp. Ticker:(MSFT) and Google Inc. Ticker:(GOOG).
The fund also has the flexibility to buy put options on stocks in the portfolio for added downside protection.
The $125 million fund, which Mr. Landis has co-managed with Han Lee since it was launched in 1999, has always been nimble with a goal of being ahead of the curve.
One current trend the fund managers are playing is the smart-phone craze, of which Apple Inc. Ticker:(AAPL) is seen as the market leader.
While Mr. Landis owns Apple in the fund, he tends to focus on the opportunities behind the strength of smart phones.
“We try to figure out the big changes and then we look at the emerging ecosystem,” he said. “We want to know who is likely to be in the sweet spot.”
Along those lines, the fund has network exposure through stocks such as Alcatel-Lucent Ticker:(ALU) and LM Ericsson Telephone Co. Ticker:(ERIC).
Cloud computing is also part of the equation, which he plays with positions in Equinix Inc. Ticker:(EQIX) and VMware Inc. Ticker:(VMW).
Further beneath the surface of the smart-phone trend, Mr. Landis sees opportunities in “chip companies” such as ARM Holdings PLC Ticker:(ARM) and Qualcomm Inc. Ticker:(QCOM).
“There's never really a time in tech when the dust settles, and that has caused the typical investor to be almost permanently skeptical of technology stocks,” he said. “Our mission is to identify the most tumultuous parts of tech, and we have to get out of our comfort zone and get close to those companies that are upsetting the order of things.”
Much like the sector itself, this fund can take investors on a bit of a wild ride.
So far this year, the fund, which has a five-star rating from Morningstar Inc., has gained 1.7%, compared with a 1.1% average for the tech fund category.
Last year, the fund gained 29.3%, compared with a category average of 20%. And in 2009, the fund gained 74%, while the category average was 62%.
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