Putnam’s Nick Thakore thrives on Apple

By Ross Kerber

BOSTON (Reuters) – Putnam Investments star manager Nick Thakore remains a fan of the Apple Inc shares in his Voyager Fund. Although the stock may look expensive to some, he says it would be hard to sell.

Thakore’s thinking on Apple and other stocks also shows the approach he has used to turn around Putnam’s flagship fund since taking over in late 2008.

Apple stock has now roughly quadrupled in value since Thakore began buying it around the start of 2009, but to Thakore, it is not overpriced. Analysts’ profit forecasts for the company have also been rising, so that lately its share price as a multiple of expected earnings has come down.

That analysis is typical of what Thakore looks for when he evaluates a stock: companies that look reasonably priced given how fast they are growing.

“That’s my style. Where I try to get my edge is to get as good or better growth rates as others, but not pay up for that growth rate,” Thakore said in an interview late last week at Putnam’s headquarters in downtown Boston.

Apple was Thakore’s largest holding as of December 31 in the fund now worth $5.1 billion. Thakore declined to discuss exactly what he has done since then. So far 2011 has not been so great — Voyager was up 2.9 percent through Friday, 1.3 percentage points worse than peers.

But the year is still young and the fund has performed well in recent years. It beat 97 percent of peers in 2009 and 89 percent in 2010. Returns were 64 percent in 2009 and 21 percent in 2010, according to Morningstar data.

The fund’s three-year returns earned Voyager a 2011 Fund Award last week from Lipper, a unit of Thomson Reuters.

LEAVING FIDELITY

Apple’s run-up has also helped Voyager competitors like Fidelity Investments’ Contrafund. Apple accounted for 4 percent of Voyager’s outperformance over the past three years, according to Putnam data. Other Thakore picks have made even bigger contributions, such as insurer Aflac Inc and John Malone media holding company Liberty Media Corp.

He also made some more obscure calls that have worked out, like going overweight on Unisys Corp and other mid-caps.

Thakore once worked at Fidelity, whose headquarters is a stone’s throw away from Putnam’s in Boston’s Post Office Square. He left in 2002 to run funds at RiverSource Investments, then was lured to Putnam in October 2008 by another Fidelity veteran, Robert Reynolds, who had just been brought in by Putnam parent Power Financial Corp.

At the time Voyager had lagged peers — part of a broader malaise at Putnam after it was clobbered by the collapse of technology stocks and then faced trading scandals. It is only just starting to recover: Morningstar says investors withdrew $130 billion from Putnam from 2001 to 2010, including $400 million in 2010. So far in 2011 it has drawn in $140 million.

BETTING ON A COMEBACK

Thakore says the 2009 turnaround was largely the result of bets he made at the depths of the financial crisis. Aside from Apple, he zeroed in on stocks that seemed oversold, like Wyndham Worldwide Corp. It was trading around $31 on Monday after sinking below $3 in 2009.

His outlook now is similarly optimistic. Thakore said he does not expect the unfolding disaster in Japan to hold back the country’s economy in the long run, though he does expect some supply disruptions. He is bullish on stocks because of high corporate profits, but worries about oil prices.

Morningstar analyst Rob Wherry said one challenge for Voyager is the end of tax-loss carryforwards. The fund has $2.3 billion of these, $2 billion of which expire in July.

In the interview Thakore acknowledged the challenge and the weak record so far in 2011. Some of that, he said, was due to stocks he expects to improve, like his second-largest holding at Dec 31, Hewlett-Packard Co. HP’s shares have gone sideways for the year so far. Just as he likes Apple, Thakore said Hewlett-Packard’s low valuation keeps it attractive with little tinkering needed by new leaders.

“I don’t think they need to transform themselves to get decent growth,” he said.

(Reporting by Ross Kerber, editing by Gerald E. McCormick)

Putnam’s Nick Thakore thrives on Apple