ML in 9/14 Dick Davis Digest

The Dick Davis Digest picked up MONEYLETTER’s profile on Reynolds Blue Chip Growth in their September 14th issue:

“Reynolds Blue Chip Growth (RBCGX)—Blue chip stocks are often thought of as the biggest and best, and the term blue chip is often associated with companies
such as those in the Dow Jones Industrial Average. More loosely, blue chip can be
defined as anything of very high quality. Frederick ‘Fritz’ Reynolds, manager
of Reynolds Blue Chip Growth, runs this fund with a looser definition. Reynolds terms the fund’s strategy as ‘opportunistic investing in companies of various sizes.’

Reynolds is free to invest fund assets in companies of any market capitalization, starting at $1 billion. The current portfolio shows that diversity. About 46% of assets were in large-cap stocks, 37% in mid caps, 14% in small caps, and 3% in micro-cap issues. In assessing stocks for investment, Reynolds looks at ‘revenue growth rates, product innovations, financial strength, management’s knowledge and experience plus the overall economic and geopolitical environments and interest rates.’ … Furthermore, Reynolds believes in a buy and hold strategy, but that does not mean buy and hold through all market conditions.

Note that Reynolds included economic and geopolitical environments and
interest rates among the factors he considers. This contrasts with some mutual fund managers who utilize a strictly bottom-up, fundamental approach to investing.
His assessment of market conditions in October 2007 caused him to move the fund to a nearly all-cash position. … His actions coincided with an intermediate top of the stock market. He began investing in stocksagain in March 2009.

So, did the fund’s flight to cash and subsequent reinvestment work? Indeed! Following
on the heels of bottom quartile (or lower) performancein 2004 through 2007, 2008’s
-5.1% return was in the top 1% of the category, followed by a near 42% gain in
2009 (top 20%), and a 24.6% return in 2010 (top 3%). This year has been a bit more complicated. Through mid-year, the fund was again ahead of the pack. But
as the market started to turn down in July, this fund took a harder hit, as some holdings such as Caterpillar and Netflix tumbled more than the market. When the
markets recover, this fund will likely follow suit.”

Walter S. Frank, MONEYLETTER
www.moneyletter.com
800-890-9670
9/9/11