In making our selections, we chose managers who also have demonstrated the investment skill, courage to differ from the consensus, and commitment to shareholders necessary for outstanding long-term performance. In 1999, a year in which nearly 300 funds delivered triple-digit gains, Jim Callinan's fund still stood out. RS Emerging Growth's 1999 return, however, wasn't the only thing that caught our attention. Callinan's fund has been remarkably consistent, even when expensive small-cap stocks haven't had a strong tailwind. For example, in 1997 and 1998, lean years for most small-growth investors, Emerging Growth put up strong absolute numbers.
Good timing explains a lot.
In 1997's second half, for example, Callinan backed up the truck for then-unloved Internet stocks, which soon skyrocketed. RS Investment Management also deserves some credit for Callinan's success. RS managers have long been allowed a lot of flexibility to make sizable wagers against their benchmarks. Of course, such bets can backfire, but Callinan has been able to avoid big blowups thus far. Meanwhile, Callinan's fund has had a central role in a compelling story playing out at RS Investment Management.