Manager with Growth (and a Hint of Value) Drives Long Term Returns


Stocks of some large cap growth names may look expensive at current levels, but Aziz Hamzaogullari, manager of the top performing Loomis Sayles Growth Fund still sees plenty of opportunity. Hamzaogullari’s growth approach has a hint of value investing in it as well. Specifically, he “looks for companies that can generate sustainable and growing profits. But he will only invest in their stocks when they sell at a significant discount to estimated intrinsic value.” Hamzaogullari compares a firm’s market value to the value a private buyer might pay for the firm.  “All else equal, the larger the discount between market price and our estimated intrinsic value, the greater we view our margin of safety.” Mr. Hamzaogullari also takes a long investment horizon with his holdings, and with only 10% turnover in the fund, trading in and out of positions happens very seldom. In another interesting twist, the manager looks for firms that are either run by founders or by individuals with a very long term focus.

His investment strategy translates into a portfolio with a high degree of active share, or differentiation from the benchmark, and currently the fund has a large overweight position in Technology shares likes Facebook, Alphabet, Amazon and Cisco.

The $1.9 billion fund has produced some impressive returns as a result of Hamzaogullari’s combined growth and value investing approach. Over the last three years the portfolio has returned 14.5% per annum, and over the last 5 years it has returned 14.1% annually.