Marsico 21st Century: Outstanding Returns
Cory Gilchrist is a growth manager with a hot hand. In the five years since he took the helm of Marsico 21st Century, the fund, a member of the Kiplinger 25, returned an annualized 22% through February 27, an average of nine percentage points per year ahead of Standard & Poor's 500-stock index.
The fund (symbol MXXIX) achieved these returns despite its focus on the shares of large, fast-growing companies, a segment of the market that languished for most of this decade. It did particularly well in 2007, gaining 19% and beating the S&P index by 14 percentage points.
"We had some pretty special stocks in the portfolio last year," says Denver-based Gilchrist, ticking off a list of home runs, including MasterCard (MA), Petrobras (PBR), Las Vegas Sands (LVS) and Monsanto (MON).
Gilchrist says he's altering his strategy a bit this year in response to a slower economic growth worldwide. He figures that commodity companies that have been relying solely on rising prices to boost profits will face stronger headwinds in a weaker economic environment. So, he's looking for "true franchise growth" companies that can boost production instead of simply raise prices.
For example, he prizes Petrobras for the Brazilian oil company's rapidly growing offshore oil reserves. Heineken appeals to him because the Dutch brewer is selling more barrels of beer in expanding markets, such as India, and has the brand power to jack up prices to cover higher commodity costs.
But Gilchrist's favorite growth stock may be Monsanto, the U.S. seed technology giant. Because Monsanto's high-tech seeds dramatically boost crop yields, they're in great demand from Brazil to Iowa. Grain prices are at record highs and a corn or soybean farmer who can squeeze more bushels of crops per acre of soil will be a richer farmer.
Gilchrist calculates that Monsanto seeds boost yields by 5% to 7% per annum and that the St. Louis-based company captures one-third of this value-added for the happy farmer. And he says more productive fruit seeds will be the next big thing for Monsanto. No wonder he believes Monsanto can compound earnings at 25% a year for as far as the eye can see.