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Winning by Thinking Outside the Box
Quaker Aggressive Growth Fund
Interview with: Manu Daftary

Author: Dave Jennings
Last Update: , :

For complete profile and charts on Quaker Aggressive Growth Fund
True, the Quaker Aggressive Growth Fund charter allows its subadviser, Manu Daftary of Boston-based DG Capital, to sell short. However, the veteran manager combines that strategy with a mix of trading, longer term holds, plus the capacity to seek growth opportunities throughout all areas of equity capitalization. Morningstar ranked the fund first in the large cap blend category for five-year performance as of May 30, 2003.

Quaker Aggressive Growth Fund

A: Unlike other growth funds, we tend to go where the earnings are. We want to buy them at a reasonable price. We want a reasonable valuation. We tend to be a little more contrarian. We like to buy them when they're down like the oil drillers in the last few weeks when they were getting hammered. I look at growth companies, but I've always followed insurance, banks, retail and healthcare. We never harm our relationships with other money managers that I've known over the years. We talk to them. We share ideas. We're just kind of friendly competitors. Our sources of information come from all over. Ninety-five percent of our ideas are internally generated. We don't do IPOs because there is no history for them. We go to investment conferences. We see companies. We go back and look at their financials and see if what they were saying makes sense. We just go where we think people are going to beat the numbers. If it is insurance, so be it.

Q: It has certainly helped the shareholders. $10,000 in 1999 is now worth $18,000.

A: Very few who can say that, I know. Like everything else, we go through cycles. Growth stocks tend to underperform when the economy is getting weaker. They tend to do better when the economy is getting stronger. I think you had two years of hot performance by the value managers. My guess is the companies that beat the numbers and have reasonable valuations, people will continue to buy them. You have to be careful of the real 'Mo stocks' is how I call them. At this point I think they're getting extended. We've owned a few of them, but we sold them too early because we didn't think the multiples were justified. We could be wrong, but what it does is keep us out of these torpedo stocks that blow up in your face. What hurts growth managers is not their stock selection on the good side; itís their stock selection on the bad side. We tend to rotate.

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