salesforce.com, inc. (NYSE:CRM) is the #1 SaaS provider in the world today and the company is looking to venture a lot in the cloud industry. Similarly Biogen Idec Inc (NASDAQ:BIIB) also has made some exciting announcements with a couple of new drugs getting launched. However, these companies are not getting the required push so far on the market and are in the under performer category.
Noah Blackstein of Dynamic Funds was on CNBC yesterday along with Kristina Hooper of Allianz Global Investors and they explained why they loved under performers and how to on under performing companies like Biogen Idec Inc (NASDAQ:BIIB) and salesforce.com, inc. (NYSE:CRM). Blackstein began the discussion with his analysis on the under performing companies and he said that the main reason for a company to under perform is the fundamentals. That is, according to him, lead companies like International Business Machines Corp. (NYSE:IBM) to under perform. He also mentioned about Cisco Systems, Inc. (NASDAQ:CSCO) and how it transitioned well this year to gain the confidence of the investors after being an under performing stock last year. According to Blackstein, Cisco Systems, Inc. (NASDAQ:CSCO) adapted well to the market demands. He particularly likes companies that are sold off.
Hooper was then asked about her views on a large cap underperformer and if she would bet on such companies. She felt that the most important factor to invest in an underperforming large cap was investment time horizon and here is what she stated about investing in a large cap:
“If investors have a long enough time horizon, they should have adequate exposure to large caps.”
Hooper felt that that the small caps would continue to outperform this year, largely due to the backdrop of monetary policy. Blackstein didn’t agree with Hooper on the large caps and said that the average stock is down 19% from its 52 week high in Russel 2000. He also said that the small caps are going to perform better as the interest rates go up. However Biogen Idec Inc (NASDAQ:BIIB) and salesforce.com, inc. (NYSE:CRM) are amongst his top bets from the list of under performers.