For Subscribers

Get the complete article now!

Six money managers examine portfolio management strategies in the latest issue of The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info550.htm

TWST: Tell us about your firm and your investment responsibilities.

Mr. DeRosa: Badgley, Phelps & Bell has been in business in the Seattle area for the past 35 years. The company started with two founders — Chick Badgley and Pete Phelps — who brought forth the concept of wealth management long before it was considered en vogue. Chick and Pete were dealing with high-net-worth individuals and businesses, and their client base grew over the years solely by referrals. I would say over the past 10 years the firm has increasingly focused its efforts on growing its institutional business in addition to the private capital growth. We have worked over the last decade to create the institutional product that we have today and are continuing to define its role in various investment environments. Of course, marketing our institutional product is a little more important today as institutional clients are less dependent on referrals and more concerned about the concept of good, strong performance. A solid product and excellent client service are, however, still very important to both types of clients, and we make this a top priority. We consider ourselves somewhat of a small boutique shop. Our current assets under management are about 1.5 billion. We have two mutual funds, the Badgley Growth Fund and the Badgley Balanced Fund, that have been up and running for over three years, which gives us several years of track record. We have 11 portfolio managers with an additional 26 in support staff, including our Portland, Oregon, office. My position here at Badgley, Phelps & Bell is Director of Research. I am also part of our three-member Institutional Equity Team.

TWST: Tell us about your objectives in the Growth Fund and what the benchmark is.

Mr. DeRosa: We consider our Growth Fund to be in the large cap, core equity growth category, and Lipper has placed us there as well. We are somewhat unique in the sense that we’re not really labeled as an aggressive growth fund, yet we’re not really a core blend fund either. We’re somewhere in between. We have several companies that are considered “core” names — the GEs (NYSE:GE) and Johnson & Johnsons (NYSE:JNJ) of the world — and we also own some of the “growthier,” more aggressive names – Concord (Nasdaq:CEFT), for instance, and Paychex (Nasdaq:PAYX) — companies that have 20%-plus growth rates. So as you can see, our Fund tends to be a combination of the two. We run an equity model portfolio that the Growth Fund closely mirrors.

TWST: What are some of the core holdings that you have at 5% positions?

Mr. DeRosa: Our top holdings include names like Fannie Mae (NYSE:FNM), which is a very profitable business that continues to grow. Johnson & Johnson is a company with very core attributes and is also one of our top 10 holdings. They are very dominant within the pharmaceutical industry but have also proven to be quite successful in the medical supply industry. We are very, very positive on this company.

TWST: Is there anything that you would like to add at this time to give a better picture of your views or your work?

Mr. DeRosa: The two main points of focus for our firm have been the consistent disciplined research process in place since the firm’s inception and the team work involved in the process. We have worked hard to continually define and evolve the research product, as we believe that it will lead to superior performance. Our objective is an independent viewpoint, separate from short-term Wall Street thinking, which adds value. Our team-oriented approach creates an environment where we don’t really have one strong manager per se, but more of a strong firm overall. These are certainly important concepts that we like to get across.

This special Investing Strategies Report includes:

1) Peter F. Ganucheau IV, Principal, Portfolio Manager/Analyst with GSB Investment Management, Inc., examines portfolio management strategies in this timely and deeply informative 11,400-word interview from The Wall Street Transcript.

2) William J. DeRosa Jr., Portfolio Manager with Badgley, Phelps and Bell, Inc., examines portfolio management strategies in this timely and deeply informative 4,500-word interview from The Wall Street Transcript.

3)Jonathan W. White, Senior Vice President and Chief Investment Strategist for Banknorth Investment Management Group, examines portfolio management strategies in this timely and deeply informative 3,100-word interview from The Wall Street Transcript.

4) Geoffrey R.B. Carey and Jane W. Korhonen, both Partner and Senior Portfolio Managers at Brown Investment Advisory & Trust Company, examine portfolio management strategies in this timely and deeply informative 3,500-word interview from The Wall Street Transcript.

5) Richard H. Earnest, Director for HighMark Capital Management, examines portfolio management strategies in this timely and deeply informative 4,900-word interview from The Wall Street Transcript.