While many of his peers are still hoofing it up the career ladder, 29-year-old Connor Browne is at the top of his game. After graduating from Princeton in 2001 with a bachelor's degree in economics, Browne passed up the glitz of Wall Street for a job at a relatively small fund shop in Santa Fe, N.M., Thornburg Investment Management. In 2006, he became co-portfolio manager of the $4.7 billion Thornburg Value fund, the firm's oldest stock fund.
The fund invests in old-school value stocks as well as growth-leaning companies. That's a result of its three-pronged approach: Browne, along with Bill Fries and Edward Maran, dedicates separate portions of the fund to classic value stocks, consistent earners, and riskier emerging companies. The idea is to have different groups of stocks working for the portfolio, regardless of what the market's doing. Browne spoke with U.S. News about life as a 20-something portfolio manager. Excerpts:
What was your first investing experience?
I started investing the summer before my senior year of college. One of the earliest investments I made went to zero—an Internet bubble stock. That was a blessing right from the get-go: Early in my career, I learned that you need a margin of safety. You need to make sure that you're not just focused on the promise but also on the discount.
At Thornburg, what do you look for in a stock?
We want promising companies that are trading at a discount. These are usually companies that have had bad news, and their stock looks cheap as a result. We come in and decide if the issues look temporary. Generally, we set our price target for one or two years away.
What are some examples of companies you invest in?
The traditional "value" stocks we buy are often in cyclical industries, meaning their performance will be much better when times are good and quite poor when times are bad. We try to buy them when they're out of favor. An example is Office Depot, which has stumbled operationally, and so has its stock price. A number of projects may help the company, such as selling more private-label goods or moving to a common information technology platform. The industry is very fragmented, and Office Depot has the opportunity to gain share against local office stores over time.
We also invest in emerging franchises, which are near the beginning of a longer growth cycle. An example is Varian Medical Systems, which makes equipment for radiation oncology. Varian's devices are high-tech computers, and as technology improves, they become more accurate and powerful. The company's sales and new orders slowed a bit as they were going through a product transition, which caused the stock to sell off. We saw the slowdown as temporary and bought a very strong franchise when it was out of favor.
How do you invest and manage your own money?
My wife and I are doing our best to save, so we've been generally conservative with spending and have invested a lot of our money in Thornburg funds. Because we have a very long time before retirement, I'm comfortable having all of our money in stocks. For others our age, it's important to keep living expenses as low as possible relative to income. Money you're able to save in your 20s becomes a very large sum by the time you retire. Using very conservative return estimates, every $1,000 invested today will be worth around $10,000 in 30 years.
Any advice for investors starting out?
My top tip is to save. Having a somewhat diversified investment portfolio is important, although for a newer investor, getting started just means picking a fund that invests in the U.S. and another that invests overseas.