By Susan Lerner, CBS.MarketWatch.com
NEW YORK (CBS.MW) - Michael Cuggino isn't one for rules.
"We don't adhere to any strict discipline, we don't have any parameters," said the manager of the Permanent Portfolio Aggressive Growth fund /zigman2/quotes/206656411/realtime PAGRX -2.67% . "We don't want to be forced into selling or buying under any numerical formula."
Designed to provide exposure to the broad stock market, the $22 million fund is an all-cap portfolio with little in the way of rules to dictate buying or selling at specific P/E ratios, minimum growth rate, or other standard criteria.
Said Cuggino: "If the business strategy's sound over a long period of time, we'll hold the stock and ride it."
Cuggino also breaks with tradition and generally doesn't meet with management. Instead he elects to get his information from published reports.
"Management is probably going to tell you to some degree what you want to hear, so we are looking for other information that corroborates what we're seeing in official information," he said.
Cuggino has managed the no-load fund since 1991. Its 4 percent average gain over the year through Sept. 8 lags the 8 percent rise for its multi-cap core category, while its three-year 2.6 percent annualized gain is in line with the category average, fund data service Lipper reports.
"When stocks are going good we expect to be outperforming the broad market but when things go bad it's conceivable we might go down with the rest of the market but hopefully not as much," Cuggino said.
The key to outperforming, he said, is diversification among market size and industry.
In making his selections, Cuggino said he first determines which areas of the economy are growing, and then identifies companies in those sectors with strong management and financial statements, innovative products and services, and growing market share.
Among his favorites is Amgen /zigman2/quotes/209157011/composite AMGN -0.34% , the biotechnology giant.
The company has both research capability and proprietary products, in addition to developing second-generation products, Cuggino said.
"If they continue along the lines they are, they can be big pharma themselves one day," he said.
Shares of Amgen lost 92 cents on Thursday to $59.06.
Cuggino also likes homebuilder Ryland Group , even amid rising interest rates.
"With interest rates low, they were a very good stock to hold," he said. "With interest rates going up gradually and with the economy improving, they're in the right markets to continue to sell houses."
Ryland sells medium-priced houses that aren't as sensitive to the economy as multi-million dollar homes, he said.
On Thursday, shares of Ryland Group gained 40 cents to $90.31.
Williams-Sonoma /zigman2/quotes/202067350/composite WSM -2.73% also stands to benefit from an expanding economy, Cuggino said.
The company is driving down operating costs and generating higher sales volume, he added. "Their products are in demand and affordable."
Shares of Williams-Sonoma lost 27 cents to $35.59 on Thursday.
Source: Lipper (Data through 9/8/04)