Finding Hidden Growth Stocks through the Recognition of Catalysts: A Wall Street Transcript Interview with David Hollond, a Chief Investment Officer, Senior Vice President and Senior Portfolio Manager for American Century Investments

Wall Street Transcript

67 WALL STREET, New York - February 28, 2014 - The Wall Street Transcript has just published its current Investing Strategies Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with highly experienced Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Bottom-Up Stock Selection - High-Quality Companies - Dividend-Paying Stocks - Midcap Growth Strategy - Secular Growth Themes

Companies include: Priceline.com Inc. (PCLN), Middleby Corp. (MIDD), Netflix, Inc. (NFLX), Monster Worldwide, Inc. (MWW), Canadian Pacific Railway Limit (CP), Canadian National Railway Comp (CNI), Alliance Data Systems Corporat (ADS) and many others.

In the following excerpt from the Investing Strategies Report, an experinenced portfolio manager discusses his methodology for finding mid-cap high return stocks for investors:

TWST: Could you please share a brief history and overview of the American Century Heritage Fund?

Mr. Hollond: We are a midcap growth strategy, and we believe that early recognition of accelerating growth rates in revenues and earnings allows us to identify companies at the inflection of their fundamental improvement. We are looking for growth rates that are growing faster today than in the recent past, and that we think will continue to accelerate or grow faster going forward.

Then also, I mentioned the word inflection. Inflection is important because we're looking for something, a catalyst that is driving a change, where there is natural inflection taking place, driven by a catalyst. So what happens with this acceleration is that it results in a cycle of companies that are accelerating, that have this dynamic growth in their business. They tend to be the kinds of company that beat earnings estimates and then raise estimates going forward, so when a company earns more over time or earns more than is expected, the price rises because of that. When companies consistently beat estimates and raise their outlook going forward, investors tend to put a higher valuation on that company. And so we call it multiple expansion; earnings multiples can rise over time as a result. That's another way that we see stock prices go up.

TWST: Can you relate that investment strategy to any specific holdings that exemplify the philosophy, that successfully show it in operation?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.