No doubt about it, the past 12 months have been a debacle for most investors. For the four stock-pickers we asked a year ago to invest a hypothetical $100,000 in 10 equities, it was humiliating as well. Even Buzz Zaino, whose Royce Opportunity Fund specializes in small-cap value stocks, took a 12.5% hit--and small-cap value was the one bright spot in the market. Still, he had the best results of our four. (Returns were measured from Dec. 8, 2000, to Dec. 14, 2001.)
Zaino attributes much of his losses to problems in the aerospace industry. Suppliers Evans & Sutherland Computer Corp. (ESCC) and Titanium Metals Corp. (TIE) both plunged after September 11, along with airline stocks. A third aerospace pick, Fansteel Inc. (FNST), faces a costly cleanup of radioactive residue at an old plant. Its stock has been delisted, and management announced it is considering bankruptcy.
The worst showing came from Maura Shaughnessy, portfolio manager of the MFS Capital Opportunities Fund, which focuses on the opposite end of the investment spectrum from Royce Opportunity: large-cap growth stocks. Shaughnessy's portfolio fell 39.7%, weighed down by troubled telecoms. One pick, XO Communications Inc. (XOXO), had its shares delisted in December after announcing a preliminary deal that would bring much-needed cash but virtually wipe out shareholder equity.
Coming in second and third, respectively, were Walter Price, of the Dresdner RCM Global Technology Fund, and Debby Kuenstner, of the Putnam International Growth & Income Fund. Price's tech portfolio lost 25.5%, perhaps something of a victory considering his sector. Kuenstner's 27.2% loss came in the midst of a growing global recession and a tough market for international stocks. Let's hope our new pickers--and all investors--fare better in '02. By Carol Marie Cropper