5 Must-Have Stocks in Your 2014 Portfolio

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Source: Thinkstock

Source: Thinkstock

Investing is as much art as it is science. While quantitative research and technical analysis afford investors keen insights into the market, there are qualitative aspects of a business that are more difficult to measure and analyze. The experience and fit of the executive team, for example, could make or break a company, pushing the business to outperform in a bull market or stay above water in a bear market.

Where a company stands in relation to market and economic trends is also a difficult thing to quantify. Ten years ago, an investment in social media was as much a gamble as playing the lottery, and those who picked correctly — we’re looking at you, Facebook (NASDAQ:FB) — were going off more than just data. They were tapping into an indistinct and often ephemeral kind of reasoning that distinguishes great investors from good investors. Or, maybe, they were lucky.

Whether it’s through clairvoyance or happenstance, many successful fund managers earn their pay by identifying market trends and the companies that stand to profit as they evolve. This is what Clay Brethour, co-portfolio manager of the Buffalo Growth Fund (BUFGX), did when he decided to invest in Facebook in August 2012, about a month before the stock hit an all-time low. The investment was a bet — a leap of faith — that Facebook would evolve from social network to social institution and that it would figure out mobile monetization.

That bet turned out to be a good one, and the investment has helped the Buffalo Growth Fund outperform the market over the past year. The success caught the eye of Barron’s, which interviewed Brethour in March and got him to speak about investment strategy and his thoughts on some of the top holdings of his fund. We don’t like to play follow the leader, but it’s definitely worth checking out what successful investors have to say.

Buffalo Growth Fund Fund Chart   Yahoo  Finance

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