Try as she might, sometimes Mary Lisanti can't keep her mind off work. Take the time a few years ago when she was a securities analyst and her car broke down during a weekend getaway. While her husband dealt with the mechanic at an auto shop, Ms. Lisanti's eyes fixed on a truck parked outside, emblazoned with the word SafetyKleen. Her curiosity piqued, she investigated. What she found was a small manufacturer that was cleaning up with a product for de-greasing tools and car parts.
It was a great little company they were the Gunk guys, Ms. Lisanti recounted over lunch in her office. She ended up recommending a buy on the company's stock. Such attention to the details of everyday life has served Ms. Lisanti well in her job as manager of the BT Investment Small-Cap Fund.
By assiduously seeking out small companies with inexpensive, value- conscious products, Ms. Lisanti propelled the $135 million-asset fund to a whopping 59.48% return in the 12 months through Sept. 30. It was the best bank-managed fund in the small-company growth category, and No. 5 among all 286 funds in the group. Ms. Lisanti, 39, who has managed the fund since joining Bankers Trust New York Corp. in 1993, says the key to making smart stock picks is to be attuned to major demographic, economic, and political themes. For instance, when pledges of health care reform helped put President Clinton in office, many thought medical companies were in for big losses. But Ms. Lisanti, who has 18 years' experience with small and mid-cap investing, felt that some nursing home companies and medical device manufacturers were grossly undervalued. She started investing in the ones that were trimming expenses and signing long-term agreements with hospitals.
Now, health care stocks such as IDEXX Laboratories, CRA Managed Care, and Gulf South Medical Supply each account for about 1% of the BT Investment Small Cap Fund's assets.
Retail products also make up a chunk of the portfolio. For instance, 2% is allocated to Dollar Tree Stores. And one of Ms. Lisanti's favorite picks is Blythe Industries, a candlemaker. Candles sounds like a dull business, but it's a wonderful business because it's highly recession-resistant, Ms. Lisanti said. She also likes the fact that Blythe's management came from Donaldson, Lufkin & Jenrette's venture capital unit, the Sprout Group. With growth stocks, she said, management is critical in determining whether or not they can realize their potential. Ms. Lisanti manages three other Bankers Trust funds, and all are hot. The $850 million-asset BT Pyramid Small Cap Fund, geared to institutional investors, follows the same strategy as its BT Investment fund twin and has posted a 49.16% return. And the BT Investment and BT Pyramid Capital Appreciation funds, which hold a combined $930 million in assets, had returns of 43.36% and 46.06%, respectively, for the year ended Sept. 30. In all, Bankers Trust manages $5.5 billion in mutual funds, which are distributed by Signature Broker-Dealer Services Inc., Boston. Before joining Bankers Trust in 1993, Ms. Lisanti worked for TK years as a portfolio manager at Lieber & Co. There, she oversaw an $800 million small and mid-cap fund that was part of the Evergreen family of funds. The fund company is now owned by First Union Corp. Her first brush with investment management came during an earlier job at Shearson Lehman Brothers, where she was a small and mid-cap stock analyst. Many of her clients were portfolio managers. She breaks away from her job by retreating to her home in rural New Jersey, where she learned to horseback ride a few years ago. Other reprieves from work include playing golf and bridge, where she's less likely to encounter any small public companies.