Big-Picture Stock Picking

The boom in emerging markets is likely to go on for years. Don't bet against energy stocks. And health care is an increasingly attractive sector of the U.S. economy.

Those are some of the big themes driving Tom Marsico's stock selection just now. Marsico, 50, is one of the most talented large-cap growth managers -- and has been for nearly 20 years.

At his first fund, Janus Twenty, Marsico chalked up an annualized return of 17% over a decade -- putting him in the top 10% among his peers. Since moving across town in Denver to set up his own funds in 1997, he's achieved similar returns relative to other large-cap growth funds. Yes, his five-year annualized return is a meager 3%. But that's better than 90% of his rivals.

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Unlike some of my favorite managers, Marsico spends a great deal of time looking at big-picture trends. But he tends to get them right most of the time. What's more, says Jim Gendelman, a member of Marsico's team who runs Marsico International Opportunities (symbol MIOFX), "at the end of the day, we're stock jockeys." In other words, Marsico does as rigorous an analysis of individual companies as anyone.

Indeed, my only concern with Marsico is that he's managing a ton of money. His firm runs $66 billion -- all but $9 billion of it in U.S. large-cap growth. But so long as Marsico keeps putting up good numbers, I'm willing to give him the benefit of the doubt. I think his Marsico Growth (MGRIX) is one of the very best large-cap growth funds you can buy.

Marsico sees slower growth in the U.S. and most of the rest of the developed world. "Obviously, emerging markets are growing at a much more rapid rate than the G-7 countries, so that's where we're looking for growth," he says.

He hopes to cash in on that growth through U.S. and foreign multinationals, which derive a increasing proportion of profits from exports to emerging markets. He likes companies such as YUM Brands (YUM), the fast-food firm, which is growing rapidly in Asia, and Caterpillar (CAT), which is selling tons of heavy equipment for construction in Asia. FedEx (FDX) isn't well understood as an emerging-markets play, he says, but it's increasing its pickups and drop-offs in Asia. America Movil (AMX), a Latin American cell-phone company based in Mexico, has also found its way into this fund.

Even some of the big financials are doing a lot of business in emerging markets, Marsico says. Among his favorites are Goldman Sachs (GS), Lehman Brothers (LEH) and UBS (UBS).

Marsico's bullishness on energy stocks stems, in part, from his optimism that emerging markets will continue to grow rapidly -- and guzzle more oil. That's led him to underwater driller Transocean (RIG), and energy-services giant Schlumberger (SLB).

Marsico sees health care in the U.S. continuing to take a larger piece of GDP. But big pharma isn't getting his fund's money. Instead, he likes UnitedHealth (UNH), a huge managed-care provider; biotech powerhouses Amgen (AMGN) and Genentech (DNA) and medical-equipment firm Zimmer (ZMH).

Opinions expressed in this column are those of the author.