Scott Schoelzel, manager of the popular Janus Twenty fund, described as "foolish" his decision to sell shares earlier this year in companies such as America Online Inc.
In a report to shareholders filed Thursday with the Securities and Exchange Commission, Schoelzel said the fund's $36-billion portfolio came under pressure as other investors began to rethink some of the fundamental assumptions supporting many investment themes at Janus Twenty.
"My own confidence wavered some during this period," Schoelzel said in the report for the year ended Oct. 31. "In retrospect, I made some decisions that now seem foolish."
Those regrets notwithstanding, Schoelzel still turned in an exemplary performance compared with most peers. Janus Twenty, which is closed to new investors, has generated a 60% return this year, ranking it in the top 10% of large-capitalization growth funds, according to Russ Kinnel, an analyst at Morningstar Inc., the Chicago-based fund tracker.
The fund invests primarily in common stocks selected for growth potential, normally concentrating its investments in a core group of 20 to 30 companies.
The report disclosed that the fund also cut its stake in Dell Computer Corp. and sold its EBay Inc. shares.
But the main move Schoelzel discussed was lightening up on AOL, the Dulles, Va., company that ranks as the world's largest Internet service provider. Janus Twenty held 35.6 million America Online shares on Oct. 31--adjusted for a subsequent stock split--compared with 54.6 million on April 30.
Without providing specifics, Schoelzel said he became too focused on short-term issues related to AOL.
He trimmed Janus Twenty's stake in the company, according to the report, only to see the share price drop further--but then rebound dramatically.
America Online shares closed at $73.81 on April 30. The stock fell to a closing low of $42 in August but then snapped back to a recent peak of $95.81.
On Thursday, AOL eased $1.25 to $81.50 on the New York Stock Exchange, trimming the year-to-date gain to 110%.
"Despite my attempts to separate shareholders from their money in AOL," Schoelzel's self-deprecating report said, "we did have the good sense to hold on to the bulk of the position."
AOL remained Janus Twenty's largest holding as of Oct. 31, representing 8% of net assets, versus 15% on April 30.