Noah Blackstein runs concentrated, high-conviction portfolios of between 20 and 30 growth stocks. "I don't pay much attention to the index," says the award-winning manager of the $488-million Dynamic Power Global Growth Class 
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The fund won the award for Global Equity Fund of the Year at the Canadian Investment Awards gala in December. "The success of winning the award, and the success of the long-term track record really," says Blackstein, "is predicated on having a disciplined approach and sticking to it."
Blackstein is vice-president and portfolio manager at Goodman & Co., Investment Counsel Ltd. in Toronto. He has managed Dynamic Power Global Growth Class since its inception in January 2001, and Dynamic Power American Growth since it began in July 1998. Many stocks are held in both mandates.
Under Blackstein's tenure, Dynamic Power Global Growth Class has a five-year 6.3% return to Dec. 31, far outdistancing the median return of -0.1% in the Global Equity category. Over the same period, Dynamic Power American Growth has returned 2.5%, well ahead of the median loss of 1.8%.
Blackstein traces the origins of his discipline back to growth-investing pioneer Philip Fisher, the author of Common Stocks and Uncommon Profits. The strategy seeks companies with strong revenue and strong earnings growth.
Under Fisher's discipline, investors must assess how much larger the company can become, and what other products and services can drive its growth. It calls on investors to maintain the conviction that if the company has strong prospects for continued growth, the stock price will follow.
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Over the last decade for global and U.S. stocks, "the mid-cap (segment) is the sweet spot of the overall market," says Blackstein. He tends to focus on the mid- to large-capitalization companies, rather than smaller ones. He says small caps don't have the track record that he looks for and they are failure-prone, while the mega-cap companies lack the growth potential that he seeks.
Though Blackstein is a bottom-up stock picker, secular themes continue to influence his mandates. The technology, health-care and retail sectors represent about 80% of the portfolio today, he says.
The computer giant Apple Inc. AAPL, a favourite holding since at least 2004, illustrates Blackstein's stock-picking criteria. When he made his initial buy, he had confidence in the company's ability to grow on multiple fronts: desktop and portable computers, the iPod music player, and the iPhone.
"Even today, they represent still less than 10% of the computer market in the United States," says Blackstein, "and only a fraction of the phone market globally." He believes that Apple still has a large opportunity to expand its reach further in various product lines, such as the iPad tablet computer.
Blackstein acknowledges that his funds have higher volatility than the average fund, "but for every unit of volatility, you've been paid for in returns." He disputes the notion that value-style management somehow equals safety. "The stock doesn't have any idea whether it's a growth stock or a value stock," says Blackstein. "I see risk as a permanent loss of capital, not the fluctuation in that capital."
Blackstein has a liberal-arts background, having received a BA in economics and political science in 1992 from the University of Toronto. Before joining Goodman & Co. in 1997, he was an associate portfolio manager responsible for large-cap global equities at the former BPI Capital Management Corp., which hired him in 1993. Blackstein received the CFA designation in 1998.
At Goodman & Co., Blackstein is responsible for approximately $1.5 billion in assets under management. While his growth discipline hasn't fundamentally changed since his BPI days, he now runs more concentrated portfolios. Currently he holds 23 stocks in each of his two mandates, compared to about 50 stocks a decade ago.
The portfolio turnover has also dropped significantly. "I think the turnover in the global fund is around 250%," says the 40-year-old Blackstein, "and for someone who a decade ago had a 1,000%-plus turnover, I've clearly mellowed in my old age."
Looking ahead, with Scotiabank soon to become the majority owner of DundeeWealth Inc. and its Dynamic Funds family, Blackstein will not be altering his investment approach.
"I've managed these portfolios through two of the worst bear markets in history," says Blackstein, "and I really haven't changed what I do, and I have no intentions of changing what I do."
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