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Top Ranked Fund Manager Finds Ways to Beat the Market

Posted Sep 23, 2009 11:19am EDT by Peter Gorenstein in Investing
Related: cbst, usu, teva, auerx

With the S&P 500 rallying sharply off the March lows, the key is not to, "get swept away by some of these momentum stocks and stocks that have been moving because those could turn around and end up burning people," say Bob Auer, portfolio manager of the Auer Growth Fund.

Auer preaches investor discipline and has a keen eye for fundamentals.

Thanks to his stock picking strategy the fund gained 31% in the second quarter and Lipper ranked it the #1 multi-cap growth fund over that same period.

For those that missed his last appearance in June, the Auer Growth Fund only buys stocks that meet the following criteria:

  • 20% quarterly year-over-year revenue growth
  • 25% quarterly year-over-year earnings growth
  • Trades at a P/E ratio below 12

Those rules have him buying shares of USEC Inc. – the country's sole provider of enriched uranium for nuclear power plants. USEC recently signed a deal with Exelon Generation Co. valued at nearly $1.2 billion.  The stock's more than doubled since hitting a low of $2.58 last November but remains well below the $24 per share it traded at in the middle of 2007.

Auer still likes Cubist Pharmaceuticals, a name he mentioned this summer. The company sells Cubicin, an antibiotic that treats the methicillin resistant Staphylococcus aureus (MRSA).

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