RiverPark Large Growth (RPXFX)
from The No-Load Fund Investor, updated from issue 724, August 8, 2012
In 2013, RiverPark Large Growth (RPXFX) gained 36.4%, vs. 32.4% for the
S&P 500 and 33.5% for the Russell 1000 Growth Index of large cap growth stocks. In the three-year period ended December 2013, the fund produced an annualized gain of 18.8%, beating the S&P 500 and the Russell 1000 Growth by about 2.5 percentage points.
In mid-January, we caught up with the fund’s manager, Mitch Rubin.
For RiverPark Large Growth, Rubin seeks companies with 15% to 20% annual growth in earnings per share, with little required capital investment to keep the business growing. Equally important, he wants to pay no more than a midteens price/earnings ratio (P/E) on his earnings estimate for the company in question.
His favorite time to buy is when a transitory issue, such as the cost of investing in a new business, hurts a growth company’s near-term earnings and Wall Street sells it off. Rubin sells when he loses confidence in a holding’s business prospects, or when considerable valuation expansion suggests that Wall Street has become a lot more optimistic than he is about it.
Despite the market’s excellent performance since March 2009, Rubin says there’s no shortage of attractive stocks in which to invest. In fact, many of these have been in the portfolio for years.
Because several of the fund’s largest holdings have appreciated less than their per-share earnings have grown over the past several years, the portfolio’s P/E is no higher than it was three years ago, he says: about 18 on his 2014 earnings estimates, and 15 on the 2015 estimates. With expected earnings growth of 20% across the portfolio, that works out to an attractive PEG ratio (P/E to earnings growth) of 0.75 on the 2015 estimates. (Earnings growth in the fund clocked in at 20% in each of 2010, ’11, ’12 and ’13.)
He continues to emphasize leading companies expected to benefit from growth in demand for such products and services as mobile computing, e-commerce, electronic payments, food, and ‘alternative’ asset-management strategies. As of year-end 2013: Top Holdings: Blackstone Group 5.3%, Southwestern Energy 3.4%, Realogy Holdings, 5.3% Monsanto 3.4%, and QUALCOMM 4.3%. Top Sector Weightings: Information Technology 24.0%, Industrials 8.9%, and Consumer Discretionary 18.2%.
Mark Salzinger, The No-Load Fund Investor, 800-706-6364, www.noloadfundinvestor.com, February 2014