Rob Roquitte, whose Harris Insight Small Cap Value Fund rose almost twice as much as competing mutual funds during the past year, is buying technology and health care stocks after cutting his holdings of energy shares.
Roquitte purchased shares of Ventiv Health Inc., a provider of marketing services to pharmaceutical companies, and Agilysys Inc., a distributor of software. He sold Frontline Ltd., the world's biggest oil-tanker company, and San Juan Basin Royalty Trust, an owner of oil and gas properties, on concern that oil prices may be peaking.
"Energy is less attractive to us today than it was a year ago," said Roquitte, 39, who manages the $426 million fund with Paul Kleinaitis in Chicago at Harris Investment Management Inc. "There is still upside potential, but more downside risk."
The Harris Insight fund climbed 27 percent in the past 12 months, outpacing the average 14 percent gain of 149 similar funds tracked by Bloomberg. The funds invest in companies with market value of less than $1.8 billion whose shares are considered inexpensive relative to earnings and other financial yardsticks. The top performer in the group was the Oakmark International Small Cap Fund, managed by David Herro and Chad Clark, which rose 31 percent.
Roquitte and Kleinaitis have about 120 stocks in their fund. The managers focus on companies that are reporting revenue growth and stable earnings relative to analysts' estimates.
The fund's largest holdings include United Defense Industries Inc., the maker of Bradley Fighting Vehicles; mental health services provider Psychiatric Solutions Inc.; and Chiquita Brands International Inc., the world's largest banana producer.
Roquitte started managing the fund a year ago, joining Kleinaitis, 46. The fund's energy position was about 14 percent of the portfolio at the time, almost three times the average for the Russell 2000 index, a measure of small companies.
"We thought that was a good place to be, but we certainly didn't foresee oil prices hitting the mid-50s [in dollars per barrel]," said Roquitte, who has degrees from the University of Denver in Colorado and the University of Chicago.
The fund has since trimmed its energy stake to 10 percent, selling Bermuda-based Frontline and Fort Worth's San Juan Basin trust during the third quarter. Shares of Frontline more than doubled in the past year and closed Thursday at $48.96, while San Juan Basin's stock rose 36 percent and finished the abbreviated trading week at $35.80.
"We're never perfect at predicting the top of these stocks," Roquitte said. "We took the opportunity to take some profits and re-deploy it."