Like many fund families, Allianz Global Investors has an army of analysts. Allianz also has a survey division that helps managers decide how to invest in stocks.
That's one reason a portfolio like $489 million AllianzGI Focused Growth Fund is still comfortable with Facebook (FB).
The social networking platform, which went public in May 2012 at 38, now trades around 26. Investors question its ability to shift to mobile advertising from desktop computers. And the media have mocked the company's pratfalls, says Focused Growth lead manager Scott Migliori.
But Allianz's latest survey of Facebook users, a month ago, found many are enthusiastic about features such as its photo-sharing app Instagram. "Instagram is a hidden asset," Migliori said. "It's getting traction with new video feeds."
Insights like that give the fund conviction in its Facebook stake. The fund boosted its position 3% in June to over 686,000 shares. The stock is up 16% from its June 6 low vs. about 8% for the S&P 500.
Migliori's team has run the fund since Sept. 24. The biggest change it made was to make the fund more concentrated.
The fund has 37 stocks, about the midpoint of its range of 25 to 45. Previously the fund typically held 50 stocks.
When volatility drops and the market is poised to rise, the fund wants to be more focused. The fund is likely to expand its portfolio soon. "We're close to where volatility is likely to rise," Migliori said.
Tech Trims
The fund's biggest sector is technology. Its 26% weighting as of June 30 topped the 24% average for large-cap funds tracked by Morningstar Inc. and 17% in the S&P 500.
The fund's biggest tech holdings are Microsoft (MSFT), Google (GOOG) and Facebook.
The fund has pared its Microsoft and Google positions since January. "Both have had good runs," Migliori said. "We took profits and reallocated to other areas."
The fund sold the last of its Oracle (ORCL) stock in June after two months of trims. The analytics software maker's Q4 earnings fell 2% as the company reported its sales fell short of analysts' expectations.
"Oracle has been negatively impacted by cloud pure plays like Salesforce.com (CRM) and WorkDay (WDAY)," Migliori said. "So Oracle's fundamentals are not progressing."
The fund also owns Salesforce.com. The fund began its current stake in February. It boosted its position in June to nearly 309,000 shares, up 26% from May.
Stock in the enterprise software company has regained roughly half of what it lost in a sell-off that began in late May when it gave guidance that just missed views and released Q1 earnings that just met expectations.
The fund upped its stake in Biogen Idec (BIIB) by 57% in June. Biogen bought an interest in multiple sclerosis drug Tysabri. Migliori expects the deal to be accretive to Biogen earnings.
He also likes MS drug Tecfidera despite some investors' concerns about Biogen's ability to win patent protection in Europe.
The fund was up 16.59% this year going into Monday vs. 16.94% for its large-cap growth rivals tracked by Morningstar Inc. and 19.16% for the S&P 500. Over the past three years its average annual return is 17.01% vs. 16.81% for its peer group and 18.44% for the S&P 500.
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