10/27/97 'WAITING FOR THE PERFECT PITCH'

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'WAITING FOR THE PERFECT PITCH'

Thousands of investors have prized their Janus Twenty shares for their years of high growth under former manager Tom Marsico. But now that Marsico has gone off to start his own fund, investors in the $6.1 billion Janus Twenty must decide whether to hang on with successor Scott Schoelzel, 39, a devotee of focused investing. He comes from Janus Olympus, where his 33-stock portfolio was up 20.2% through August, his last full month at the fund. Olympus narrowly trailed the broad market this year and last. But it trounced its midsize stock benchmark by seven percentage points in 1996, and 3.6 points through August. Schoelzel spoke by phone with Senior Writer Robert Barker:
Q: Why do you like running a portfolio with so few stocks?
A: I don't feel the urgency to do anything. I really like the notion of waiting for the perfect pitch.
Q: What would get you to take a swing?
A: There are a limited number of truly great businesses, truly great management teams. I'm trying to find the few icon-like firms that offer huge opportunities.
Q: Such as?
A: Colgate. It's got a new toothpaste that's been approved by the FDA, Total, that should do very well. Another is Charles Schwab. That's not in the fund now, but it will be this time next year. It has just an amazing management team.
Q: But aren't those stocks already fully valued by the market?
A: I'm not a complete value nut the way some guys are. I'm willing to own Microsoft at a higher price-earnings ratio because I'm not smart enough to figure out what intrinsic value is.
Q: What else do you like?
A: Nextel. It's a $7 billion market-cap now, and it could grow to $25 billion. I think they're really on to something with Direct Connect [a two-way radio in a cellular phone].
Q: How will the portfolio look in a year?
A: It's now highly concentrated in large stocks. My inclination is to add some mid-caps. But it won't be radically different. Managing a portfolio is kind of like carving a block of wood: The less you cut it, the stronger the block.

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