Nick Calamos needs a rebound in Internet-related stocks, such as Amazon.com and eBay, to propel the Calamos Growth Fund past the Standard...
Nick Calamos needs a rebound in Internet-related stocks, such as Amazon.com and eBay, to propel the Calamos Growth Fund past the Standard & Poor’s 500 Index for a seventh straight year. He’s counting on one.
“We have some of the core companies in that space that we think are going to do extremely well,” Calamos told investors in a recent conference call.
This year’s losses in their shares are “a short-term blip,” he said.
Seattle-based Amazon, the world’s largest Internet retailer, and eBay, the Web’s largest marketplace, are among Calamos’ top holdings.
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Shares of both companies have tumbled this year in response to disappointing forecasts, spurring a 10 percent decline in the $13.9 billion fund as of April 26.
This year, the fund is ranked 238th out of 257 similar funds and has lost more than twice as much as the S&P 500. The group’s best performer is the Hennessy Focus 30 Fund, which had gained 6.2 percent through late last month.
Calamos Growth, co-managed by Calamos and his uncle, John Sr., has ranked in the top 16 percent of its class every year since the streak began in 1999, according to data tracked by Bloomberg News.
“They make savvy bets, but they could be caught leaning the wrong way,” said Kerry O’Boyle, an analyst at Morningstar, a research firm in Chicago. “We still like the fund, but such a streak is harder and harder to maintain. I wouldn’t be pounding the table telling people to buy this fund.”
Calamos Growth is the largest fund run by Calamos Asset Management, based in Naperville, Ill., where the two family members are co-chief investment officers. The family has a 76 percent stake in the company, which went public in October.
The fund surpassed 85 percent of U.S. growth funds, which favor stocks most likely to increase sales and earnings, in the past five years. Its annualized return of 3.2 percent compares with a negative 3.1 percent for the S&P 500. Forbes magazine gave the Calamos fund a No. 1 ranking in its 2004 Honor Roll.
Money has followed the performance. Assets have swelled 64 percent, from $8.5 billion a year ago, and have more than tripled during the past two years. Calamos Asset has also benefited, as total assets under management as of March 31 had climbed 32 percent from a year earlier, to $38.2 billion.
Stakes in Amazon, eBay and Yahoo!, the owner of the most-visited Internet site, account for 8.5 percent of Calamos Growth’s assets. The fund holds 175 stocks.
Similar to Legg Mason
Amazon and eBay were also among the 10 biggest holdings of Bill Miller’s Legg Mason Value Trust, which has surpassed the S&P 500 for a record 14 straight years, as of Dec. 31.
Fourth-quarter rallies in the two stocks allowed Calamos and Miller to beat the benchmark in 2004 and keep their funds’ streaks alive.
Miller wrote in an April 15 report on Legg Mason’s Web site that he is “drawn to some of the more venturesome areas of the market — including selected technology and Internet-related stocks.”
“He has a unique way to look at businesses,” Calamos said during the interview.
“He sees the big picture, and I think we do, too. E-retail is on a pretty high-growth track,” he said, referring to electronic retailing.
Legg Mason is one of three U.S. mutual funds that have longer streaks of beating the S&P 500 than Calamos Growth, according to Morningstar. The others are the Quaker Strategic Growth Fund and the AIM Leisure Fund.
Calamos Growth benefited last year from a jump in shares of Apple Computer, the maker of the popular iPod digital music player.
The company’s shares more than tripled amid surging demand for the devices.
Apple, which became the biggest holding during the first quarter, is the only one of its 10 largest investments to rise this year.