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T. Rowe Group, Inc. (TROW) Message Board

  • jzhands jzhands Jun 10, 2009 6:23 PM Flag

    Why is TROW the largest holder of JDSU

    This co hasn't met their earnings since at least 2005. Certainly strange and a horrible holding.

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    • It's called prideful investing. Brian Rogers most likely approved the decision to buy in Feb 2000 and he is bound and determined to get his cost basis back.

    • Perhaps a "better" question is why would an investor (long or short) in TROW be concerned about a single investment postion that represents .037% of AUM???

      TROW owns 13.75% of outstanding shares of JDSU spread among 11 of its funds with T Rowe Mid Cap Growth Fund (RPMGX) by far the largest holder. RPMGX holds 15.75 million shares or 7.30% of JSDU, after having bought 750K during the first Q of this year. Second largest TROW fund owning JSDU owns .78% of its outstanding shares. That's why I'll focus only on RPMGX.

      Like you, obviously RPMGX doesn't only one one position and just like you, not all investments will be profitable (the final chapter re TROW's investment has not been written yet). If you realized the following, you probably would not have posted your post (of course, I'm giving you the benefit of the doubt about other motivating factors): RPMGX's JDSU position represents .9% of its assets. I would not consider this an outsized investment! Personally I have many positions that represent more than 1% of my portfolio--heck, TROW represents 4% or so, after adding 50% more shares 4Q 08 @ 30.05 to what remained of my original position that was initated 7/20/95 at 4.40 (sorry for the digression).
      Since RPMGX is made up of many individual equities, I HOPE you can appreciate that the fund's total return is more relevant than one of its holdings. Let's review RPMGX's total return numbers; I used Bloomberg's function for this.

      It should be noted that from what I could discern, TROW starting buying JSDU sometime in Sept 2007 (and didn't buy all shares in the 16 buck ranage).

      Total return from 9/14/07 - 6/10/09:
      RPMGX -16.05%
      VIMSX -22.00% Vanguard Mid Cap INDEX FUND
      JDSU -37.21%
      SPX -16.44%

      While JSDU hasn't fared too well for RPMGX,EVIDENTLY other positions have more than made up for it on a RELATIVE basis.

      RPMGX is 5 star rated by Mstar for five years and 4 star rated for other time parmeters.

      One could question why JDSU is in a Mid Cap fund, but that wasn't part of your post.

      In conclusion, it is folly to review a single holding of a mutual fund company under the guise of investment research for a publicly traded fund company. There are much better parameters.

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