Wanger
Ralph Wanger
USA Today asked a group of portfolio managers who they would prefer manage their personal wealth, and Ralph Wanger was the most frequently chosen advisor ahead of even Warren Buffet. Wanger is known for leading the Acorn Fund, one of the top performing small-cap funds in the U.S. between 1970 and 1988. During that time period Acorn yielded a 16.3% annualized return significantly above the S&P500 Index during the same span. One of Wangers most impressive success stories is when he purchased the stock of International Game Technology, a leading producer of slot machines for $1 a share in 1988, just after new management had taken over, and later sold the stock in 1993 when the price hit $40 per share.
Wangers’ philosophy is to invest in superior small company stocks that will benefit from general trends. He points to general economic, social and technological trends as being the main drivers for corporate sales and profits. His success has stemmed from observing these trends and pointing out which of these trends would be the longest lasting. In general, Wanger attempted to focus on trends that he felt would last at least 4-5 years. His ability to identify long-term trends that would give a particular business an edge is what set him apart from other investors. During his run some of the trends he exploited were:
• The information revolution, and its impact on costs
• The expansion of world telephone and data networks
• The business of leisure, boosted by affluent older baby-boomer
• Outsourcing, as companies save on unnecessary components and focus on their core functions
• Money management, necessary for the survival of an aging population
Wanger feels that many analysts often neglect small companies even though the small companies are the ones that most often carry the greatest growth potential. In his book “A Zebra in Lion Country,” Wanger points out...
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