Our call of the day comes from from Gerald Sparrow, chief investment officer of the $31 million Sparrow Growth SGNFX, +2.07%, a midcap growth fund that is in the top 2% year-to-date for its Morningstar category.
While Sparrow didn’t see the current pandemic coming, his portfolio shows he was a couple of years ahead of the game. He bought Zoom ZM, +2.03% videoconference rival RingCentral RNG, +4.53% in 2017 — those shares are up 131% over 12 months. In 2018, the fund bought electronic signature company DocuSign DOCU, +0.36% — the stock has surged 200% in a year.
So what is the next big trend he’s got his eye on? “The places we are seeing continued growth is in health care,” says Sparrow. Specifically, moving health care online and reducing physical visits to the doctor. That means investing in companies like Teladoc Health TDOC, -0.04% — up 215% in a year and owned by the fund since 2017.
Sparrow is keen on entertainment and what he sees as permanent pandemic changes, such as children staying in touch with friends wherever they are via messaging apps like Snapchat, owned by Snap SNAP, +0.77%, and the importance of smart televisions and companies like streaming device maker ROKU ROKU, +8.92%, he says.
For investors questioning how to keep making money in an ever-evolving pandemic world, Sparrow says he doesn’t try to time the market, but instead pores over historical data, quarterly announcements and all the company data.
“We are looking at revenue growth and unit growth,” he says. For example, he wants to know how many cars online automobile seller Carvana CVNA, +3.37% is selling. He bought shares in 2017 and they are up over 90% in 12 months.
His strategy is “simple, but it requires a lot of thinking. You have to outthink other investors and not be shaken by emotions or fluctuations in the stock market. We’re very strict at looking at the numbers. We have a formula, we have models and we do not violate our models unless we can prove statistically that a change in our models would improve our returns,” says Sparrow.
Read:How the pandemic has changed tech in its first 100 days
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