- Gerry Frigon, the lead manager of the Taylor Frigon Core Growth Fund, shares his unique approach to filling out a stock portfolio — one that leads to his buying lots of nontraditional names.
- The fund has soared 22% over the past year, putting it in the 95th percentile relative to competitors.
- In an exclusive interview with Business Insider, Frigon laid out which stocks have been most instrumental to his success, and revealed his big bet for the future.
- Visit Business Insider’s homepage for more stories.
A quick glance at Gerry Frigon’s portfolio might elicit a scratch of the head.
Sure, the Taylor Frigon Core Growth Fund is up 22% over the past year, putting it in the 95th percentile compared to peers. But the stocks comprising the fund are an unusual smattering of relative no-names, with most popular mega-cap tech companies missing entirely.
It hasn’t mattered. Frigon’s fund — which counts Glaukos, Kornit Digital, Airgain, and Carvana as its top-weighted holdings — currently sits in Kiplinger’s top-10 ranking for mutual funds.
Beyond that, Taylor Frigon Capital Management — which oversees $200 million — was named the best advisory firm in California for 2018 by Acquisition International Magazine.
This is not to say the companies in Frigon’s portfolio are particularly small. They still carry multi-billion-dollar valuations, and wield considerable influence in their respective industries. Most of them just don’t carry the type of A-list name-brand recognition normally associated with high-flyers like Facebook and Apple.
Business Insider spoke to Frigon to find out which companies have been most instrumental in his market-beating returns. They are as follows, with all quotes attributable to Frigon:
Fiserv
Frigon says his firm sold its holdings of data-processing company Fiserv last year after 23 years of owning it.
"That was a huge success, and it’s an example of what we’d consider to be an ideal scenario," he told Business Insider. "Because even over the last five years it quintupled."
He continued: "It was one of those where, even though we owned it for a long time and enjoyed huge returns, it still had a huge return over the last five or so years we owned it."
ResMed
ResMed — which makes medical products for sleep apnea abatement — has been another shining star for Frigon’s portfolio.
"In terms of names off the normal radar screen — which we’ve owned for a pretty long time, and which have provided strong returns — one would be ResMed," Frigon said. "That’s been a really good performer, and we’ve owned it for like 15 years."
Glaukos
Glaukos is a relatively new addition to Frigon’s portfolio.
"It’s a really cool medical-device company," he said. "We’re pretty big on medtech-type companies. They make a very innovative device for the treatment of glaucoma. That’s done really well, and there’s a lot more in store."
Tractor Supply
This company may not fit Frigon’s usual tastes, which are largely focused around technology, but he’s still a huge fan of what its stock offers.
"It’s a simple business that has a nice moat around it," he said. "We like to have those types of companies that aren’t direct technology in our portfolio."
Frigon added: "It’s harder and harder as a growth manager to do that these days. So when we do find them, we want to stick with them as long as we can."
Frigon’s big bet for the future
Now that it’s been established why Frigon finds his fund in elite company, it’s important to understand where he sees the biggest opportunities going forward. The answer is simple: Israeli tech.
The crux of Frigon’s bullish stance is the shift he sees taking place in Israel away from an application software-driven market — one he says is veering quickly towards core technologies.
He notes that the early portion of his 30-year career was marked by a similar transition towards core technology, specifically in the semiconductor and biotech spaces. Then, amid the dotcom blow-up, Frigon says it was like core technology "had the plague."
Which brings us to modern day, where Frigon is forecasting another resurgence — one he says Israel is perfectly positioned to use to its advantage.
"We think that transition is happening," he said. "It’s been happening, and it will continue to happen."
He continued: "That core technology will start to garner more value. And nobody does that like Israel. From that standpoint, we think there’s a lot of opportunity there, in Israeli technology."
In fact, Frigon is so sold that he’s created a separate Israeli Innovation Strategy that contains 13 stocks. And while those holdings are carved into his firm’s Core Growth fund, he prefers to view them as a standalone entity.
There’s just one small catch: The companies in Frigon’s Israel portfolio are so highly sought-after that there’s a risk they’ll be acquired, stopping any long-term return momentum in its tracks.
This may seem like a positive, given the share spike acquisition targets normally enjoy after a deal is announced. But Frigon disagrees. Although, in the case of recently-purchased Mellanox, he had all bases covered.
"A lot of people think it’s great when a company gets acquired, but we hate it, because we want to own them for years," Frigon said. "Nvidia just took our growth away by buying Mellanox. It’s a good thing we own it too."
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Source: Business Insider – jciolli@businessinsider.com (Joe Ciolli)