Like many bank-employed stock pickers, Wells Fargo & Co.'s Jonathan R. Hickman has worked in relative obscurity, despite having one of the industry's most enviable track records.
Indeed, the combined return of the growth stock portfolios he oversees for the San Francisco-based bank ranks in the top quartile of all growth equity portfolios for a variety of time periods.
This performance has helped Mr. Hickman, 42, pull in bundles of money for Wells Fargo.
He started in 1987 with $50 million. Now the portfolios he supervises, all of which make nearly identical investments, have about $1 billion of assets. And he does it all with a staff of five analysts.
Nearly all of that money is in trust funds and individual investment accounts, which don't get nearly the same level of publicity that mutual funds do. That means that Mr. Hickman, a Boy Scout troop leader, and former high- school wrestler, doesn't command nearly the kind of name recognition that retail fund managers get. But all of that could change. That's because two Wells Fargo mutual funds that have been managed by Mr. Hickman since their inception in 1993 are starting to post the kind of track records that command attention. One of the funds, Stagecoach Institutional Growth Stock Fund, which recently celebrated its second anniversary and now has $130 million of assets, posted a total annual return of 45.37% in the year ended Sept. 30. That makes it the best performing growth stock fund of all bank-managed funds in the period and the tenth best of all 545 funds in the category, according to Lipper Analytical Services Inc.
Further, a similar portfolio manage by Mr. Hickman, the Overland Express Strategic Growth Fund, is on a pace that's likely to earn it a coveted five-star rating from Morningstar when it reaches its third birthday in January, said Wells Fargo executive vice president Michael J. Niedermeyer, who is Mr. Hickman's boss.
The fund posted a total return of 106% from its inception through Sept. 30. We're very pleased with the commitment Jon has delivered for us, Mr. Niedermeyer said.
In an interview, Mr. Hickman credited his success to his stock-picking discipline, which mixes both a short-term and a long-term focus on earnings and price.
Specifically, Mr. Hickman said he concentrates about two-thirds of his money in so-called core companies which he expects to post earnings gains of at least 15% to 20% over the next three to five years. Most of the rest of his money goes into event stocks, which are stocks he expects to rise smartly over the next six months to a year because of a short-term development. An example of a core buy was a propitiously-timed investment last year in Intel Corp. warrants after the company's stock had slumped on reports of bugs in its Pentium chips. Over the year, Intel's sales surged, and the stock-based warrants rebounded, providing a more than 300% return. A good short-term buy was Mr. Hickman's investment last year in the Student Loan Marketing Association. He figured the company, better known as Sallie Mae, would surge with the ascension of Republicans in Congress on investor expectations that the GOP would weaken President Clinton's proposals to reform student lending. He was right. He bought Sallie Mae in the high $30s and sold in the high $50s. Mr. Hickman focuses heavily on technology companies, which account for about 38% of his holdings. He also concentrates on health-care companies, credit card companies, and transaction processing concerns like First Data Corp. He invests in both small-cap and large-cap companies. Two stocks he likes now are Komag Inc., a leading supplier of magnetic storage media for computer disk drives, and Phamis Inc., a maker of software for managing hospital records. Mr. Hickman sees these as two theme plays on the information superhighway. Growth on the Internet means growing demand for high-end computer storage devices, he says, while the efficiency push in health care should benefit strong software makers in the field. Dabbling in health-care technology is in one respect quite appropriate for Mr. Hickman. He became a portfolio manager only after failing to get into medical school.