Investing: Diversification may help Moog grow

Question: Price gains in my shares of Moog Inc. have slowed. What are the prospects?

Answer: This global maker of precision control components and systems, for use with such things as aircraft, satellites and medical devices, has had a good year.

Founded in 1951 as Moog Valve Co. with the inventions of William Moog, it continues to grow through new products and acquisitions. This year it acquired sensor-maker Crossbow Technology Inc. for $32 million and motion-technology company Animatics Corp. for $25 million.

Earnings rose 17% to $619 million in its fiscal fourth quarter on strong sales gains in commercial and military aircraft, industrial systems, tactical missile controls and medical devices. It will profit from a number of aircraft platforms entering production, including the Boeing 787 Dreamliner.

The question for investors is whether the company’s strong points will overcome challenges from cuts in military spending and from strong competition in the controls business.

Shares of Moog Class A stock are up 6% this year after a 36% gain last year. Class A shares have one-tenth the voting rights of Class B shares, which are held primarily by past and present employees. The company recently authorized a share repurchase of as many as 1 million shares of either A or B shares.

Moog management sees no industrial recession ahead.

“Our incoming order rate in both Europe and Asia is strong,” Robert Brady, named executive chairman in December after stepping down as chairman and chief executive, said in the earnings conference call. “We believe the strength in Europe has to do with the fact that our customers are machine builders, who export into emerging economies.”

Robert Scannell, previously president and chief operating officer, was named CEO and is expected to continue Brady’s strategies.

The consensus analyst rating on Moog shares is “buy,” according to Thomson Reuters, consisting of three “strong buys,” four “buys” and four “holds.”

Moog is affected by economic conditions and delays in the completion of aircraft and other projects. A positive event is that the once-troubled medical division, formed through acquisitions to diversify away from strictly aerospace and defense, has been showing improvement.

Earnings are expected to increase 12% this fiscal year and 13% the following fiscal year, according to Thomson Reuters. The five-year annualized return is projected to be 9%, compared with a 14% forecast for the aerospace and defense industry.

Janus Triton Fund shows strength

Question: Please provide an opinion on Janus Triton Fund.

Answer: It has turned in strong results by balancing risk and reward.

Well-managed, fast-growing companies constitute its small-cap portfolio, making it worth considering by investors seeking price appreciation.

Chad Meade and Brian Schaub have been co-managers since 2006, assisted by a group of Janus Capital Group small-cap analysts. Meade and Schaub each have $1 million of their own money invested in the fund, in effect aligning their goals with those of their shareholders.

The $2.1-billion Janus Triton “A” is up 7% over the last 12 months and has a three-year annualized return of 32%. Both results rank in the upper one-tenth of small growth funds. Its five-year annualized return of 8% ranks near the top of its category.

“Janus Triton is doing well and has done well in a variety of markets,” said Kathryn Young, mutual fund analyst at Morningstar in Chicago. “Like most small growth funds, it can be pretty volatile, which is why we don’t recommend more than a 10% position in a portfolio.”

Janus describes the fund as designed for investors “looking to diversify their portfolios and add the upside potential of small to mid-sized companies.” Differentiated business models and sustainable competitive advantages are some of its considerations.

Because of the patient nature of its managers, Janus Triton Fund is less volatile with less turnover than most of its small-cap peers. It holds 70 to 100 stock names, with the least risky generally the largest holdings in the portfolio. That has made it more resilient than many others in its category but can also potentially hold it back in strong market rallies.

Business services represents 18% of the portfolio, healthcare, 16% and consumer goods, 13%. Largest stock holdings were recently SBA Communications Corp., Dresser-Rand Group Inc., Gen-Probe Inc., VistaPrint, TransDigm Group Inc., Blackboard Inc., MSCI Inc., World Fuel Services Corp., National CineMedia Inc. and Masimo Corp.

This 5.75% “load” fund requires a $2,500 minimum initial investment and has an annual expense ratio of 1.07%.

Mead and Schaub, equity analysts before taking over this fund, also became co-managers of Janus Venture Fund in 2010.

How best to cut down on paper records?

Question: I want to reduce the amount of paper records of my investments. What should be kept as paper and what can be handled otherwise?

Answer: First get organized so you know exactly what records you have and what is incoming. All those envelopes of statements can stack up quickly.

You can get rid of monthly documents, but should hold on to year-end statements from your brokerage, 401(k), IRA, Keogh and various other investment accounts until you sell the individual holdings. Any records of sales of stocks, mutual funds, bonds or other assets indicating purchase and sale prices should also be kept.

It may be time to consider having your financial information kept online by the custodian of your records, such as a brokerage or mutual fund family, rather than continue to receive all that paper, said Susan O’Grady, certified financial planner at Equipoise Wealth Management Inc. in Denver.

“Online record keeping is wonderful for reducing space dedicated to storing your financial records,” O’Grady said. “However, before you shred documents make sure the custodian of your online record has complete and accurate data.”

Compare what you have in hand with the online records to be sure they match up, she concluded.

Andrew Leckey answers questions only through the column. Write to him at yourmoney@tribune.com.