The idea that companies have to spend money in order to make money was an underlying rationale for the portfolio that Michael Manns assembled last July. Then a senior portfolio manager with Phoenix Investment Partners’ Engemann Asset Management, Manns selected four companies he felt were poised to increase capital spending–investing in long-term assets of the company such as buildings and machinery. Overall, his portfolio is up 9%, compared with a 17% return for the Standard & Poor’s 500 index.
Shares of Cisco Systems Inc. (CSCO) led the way, climbing almost 35%. The stock had been in a slump, but momentum reversed course last August when the network-equipment maker reported strong sales growth for its fiscal
fourth quarter. Shares posted a one-day climb of 14% on the news, and this marked the beginning of its upward trajectory. In its most recent quarter, Cisco posted earnings growth of 34%, thanks in part to the demand for equipment that allows companies to deliver video on their networks.Next in line were shares of Danaher Corp. (DHR), the industrial tools and technology company, which rose by 18.8%. The company is best known for making Sears Craftsman tools, dental technology, and water testing equipment. Close behind in performance are shares of General Electric (GE), which are up 15%.
Unfortunately, those positive results were weighed down by the steep decline of shares of Boston Scientific Corp. (BSX), which fell nearly 33%. Its drug-eluting stent Taxus, used for heart patients, faced safety concerns. “That caused revenue compression, which ended up hitting the stock,” says Manns. The company also wrestled with its $27 billion merger with medical device maker Guidant Corp. in April 2006.
| Company (Ticker) | Price 2/22/06 | Price 5/9/07 | Total Return* |
| Boston Scientific Corp. (BSX) | $24.13 | $16.24 | -32.7% |
| Cisco Systems Inc. (CSCO) | 19.67 | 26.51 | 34.8 |
| Danaher Corp. (DHR) | 61.07 | 72.55 | 18.8 |
| General Electric Corp. (GE) | 32.41 | 37.26 | 15.0 |
| Total Portfolio | Â | Â | 9.0 |
| S&P 500 | 1,292.67 | 1,512.58 | 17.0 |
| CURRENT VALUE OF$4,000 INVESTMENT: | $4,358.38 | Â | Â |
*Includes stock splits and dividends source: yahoo! Finance