By Charles Stein
Sept. 8 (Bloomberg) -- Nick Thakore, whose Putnam Voyager Fund has beaten 98 percent of rivals this year, is leaning more on stocks that investors ignored in the market’s rally since March to help him stay ahead of the pack.
“I have shifted my focus to more stable companies that were left in the dust,” Thakore said in an interview at his Boston office. Holdings he expects to drive gains include biotech firm Genzyme Corp. and video-game maker Nintendo Co., which fell this year as the Standard & Poor’s 500 Index rose 11 percent through Sept. 3.
The $3.3 billion Putnam Voyager surged 44 percent in 2009, landing it in the top 2 percent of large-capitalization growth funds, according to data compiled by Morningstar Inc. The fund is headed for its best year since 1999, when it returned 56 percent, including reinvested dividends.
Putnam Investments, based in Boston, is counting on improved performance to reclaim market share it lost as investors fled. Its ranking in fund assets slid to 26th in July from fourth at the end of 2001, according to Financial Research Corp., a Boston firm that tracks the data. Chief Executive Officer Robert Reynolds said in April he hoped to lift Putnam back into the list of the top five fund companies.
“Putnam is going to have to have several years of good performance before brokers that were once part of the fold come back,” said Geoff Bobroff, president of Bobroff Consulting Inc. in East Greenwich, Rhode Island. Putnam funds are sold through financial advisers, who typically look at multiyear records.
Fidelity Flavor
Putnam was bought in 2007 by Montreal-based Power Financial Corp. from New York-based insurance broker Marsh & McLennan Cos. Reynolds joined in 2008 after spending 23 years at Fidelity Investments, rising to vice chairman. Thakore is among a number of former Fidelity colleagues Reynolds recruited, including Walter Donovan as chief investment officer.
Thakore, 42, worked as an analyst and portfolio manager at Fidelity from 1993 to 2002, where he oversaw the Fidelity Fund. He was a fund manager at RiverSource Investments from 2002 until October, when he joined Putnam.
“It’s very important to perform here because this fund has struggled in the past,” Thakore said.
RiverSource Growth Fund, which Thakore managed before coming to Putnam, averaged returns of 4 percent annually in the six years ending Sept. 30, 2008, Bloomberg data show. That compared with 8.1 percent for the S&P 500.
Voyager, opened in 1969, swelled to $46.4 billion in assets at its peak in March 2000, data from Chicago-based Morningstar show. The fund lost 52 percent in the three years ended December 2002. Investors withdrew $19.7 billion from Voyager since the start of the decade, according to Morningstar.
Investors Attracted
The fund attracted net $25.8 million in July, Morningstar data show. That was its second monthly inflow since 2000.
Voyager benefited from owning stocks including computer maker Apple Inc. and insurer Aflac Inc. early in the year “when their prices were disconnected from their real value,” Thakore said.
Apple, based in Cupertino, California, almost doubled in 2009. The fund reduced its Apple holding by 42 percent from Jan. 31 to June 30, according to Bloomberg data and a regulatory filing by the fund in March. Apple was Voyager’s largest position at 3.8 percent of the portfolio as of the end of June, Bloomberg data show.
Aflac, based in Columbus, Georgia, more than tripled since the market’s 12-year low on March 9. Investors were too bearish about the company’s prospects during the financial crisis after Lehman Brothers Holdings Inc. collapsed last year and American International Group Inc. was bailed out, Thakore said. The stock, which closed at $38.86 on Sept. 3, could reach $60 if Aflac meets Wall Street earnings estimates for 2010, he said.
‘Fantastic Turnaround’
Jonathan Rahbar, a fund analyst at Morningstar, described Thakore’s 10-month tenure at Voyager as “a fantastic turnaround job so far.” Morningstar raised its rating on Voyager in September to four out of five stars.
Thakore, in the fund’s regulatory filing, said his goal was to own a portfolio of companies that will increase earnings and cash flow faster than the overall market. “But I don’t want to pay up for that growth,” he wrote.
Genzyme, the Cambridge, Massachusetts-based maker of treatments for rare diseases, fits the definition of a “growth company selling below fair value,” Thakore said in the interview.
The shares dropped the most in more than seven months on July 22 after the company cut its 2009 profit forecast because of a plant closure that restricted drug supplies. Genzyme said it needed to decontaminate a Boston factory after detecting a virus.
Company Setbacks
Thakore said it was “just a matter of time” before the company fixes the problem and returns to earnings growth. Genzyme fell 16 percent this year.
Nintendo, the Kyoto, Japan-based maker of the top-selling Wii video-game console, reported a 61 percent plunge in net income in its latest quarter as the product’s sales fell for the first time since it was introduced in 2006.
The company, said Thakore, suffers from both a weak global economy that has led to lower consumer spending, and a lack of new games. He predicted Nintendo would soon start to see improvement on both fronts.
“I may be the only person who likes this stock anymore,” Thakore said. Nintendo slumped 30 percent in 2009.
Thakore said the stock market could get a boost from what he expects to be a “strong cyclical recovery” over the next few quarters as the U.S. pulls out of the recession that began in late 2007. He declined to make a specific economic forecast.
Economists at New York-based Morgan Stanley in the past month raised their forecast for U.S. gross domestic product for the current quarter to 4.8 percent annualized from 3.5 percent.
To contact the reporter on this story: Charles Stein in Boston at cstein4@bloomberg.net.
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