Veteran money manager John Calamos, who heads funds managing assets of close to $38 billion, reckons technology stocks are a good bet for now as U.S. companies invest in innovation.
An active investor in growth stocks, the 70-year-old chief executive of Calamos Asset Management Inc
Technology, we think, is priced very attractively, Calamos said in a telephone interview. The growth of these companies is not priced into their current value.
His largest fund -- Calamos Growth Fund with assets of $9.5 billion -- is 41 percent invested in the technology sector.
The fund returned 12.5 percent in the fourth quarter, beating the S&P 500 index's <.SPX> 10.8 percent gain, but lagging a 14 percent rise on the Russell Midcap Growth Index <.RMCCG>.
Calamos likes Google's advertising model and Apple's product innovation, and said the issue of Apple CEO Steve Jobs' ill-health was unlikely to make him change his holding in the stock.
We are worried about Steve Jobs, but we feel the size of the company now is at a point that it's more than just one person. So that makes us positive on it.
An advocate of investing in convertible securities, Calamos said he learned the basics of managing risk while he was a fighter pilot in Vietnam.
It's a lot like investing. It's all about risk management.
Calamos is underweight on financials and healthcare, due primarily to ongoing U.S. government regulatory reforms.
This idea that government can do things better than the market economies to me is a flawed assumption, he said.
While the U.S. economy is showing signs of improvement, the possibility of higher interest rates makes Calamos more wary of the bond market.
Bonds have been the safe haven for many, but if interest rates rise that safe haven cannot be so safe.
He reckons equity market valuations are favorable, but notes investors remain skittish and hesitant to get into equities.
I guess investors tend to forget that every bull market climbs a wall of worry, and definitely we have plenty to worry about, he said.
Calamos raised his investment in energy to 9.5 percent in the last quarter, and holds a 2.3 percent stake in Apache Corp
A professional investor since 1970, Calamos believes the markets have a broad, real-time view of the world and price in all considerations -- it's part politics, part economics, part psychology and part math, he says.
People don't realize that we vote every two years in elections, but markets vote every day. They're the leading indicators.
(Reporting by Sweta Singh in Bangalore, Editing by Ian Geoghegan)