Manager spotlight

Larry Puglia, Portfolio Manager
Larry Puglia, Portfolio Manager of the
T. Rowe Price Blue Chip Growth Fund (PRWCX)

Finding Sustainable Growth

Larry Puglia, portfolio manager of the T. Rowe Price Blue Chip Growth Fund, identifies opportunities in the market's largest companies.

Since its 1993 inception, the Blue Chip Growth Fund has outpaced its Lipper benchmark.1 Portfolio Manager Larry Puglia, who's managed the fund from its beginning, credits this success to T. Rowe Price's global research effort. The firm's team-first ethic belies the central role Puglia has played in developing and implementing the long-term, quality-conscious process that drives the fund's stock selection. "We think that if you marry rigorous research with a logical methodology, consistently good results are achievable," he says.


Puglia has a mechanical mind. Growing up in the small coal town of Waynesburg, Pennsylvania, he enjoyed fixing things. He spent his summers repairing cars, painting bridges, and working on a gas pipeline. "I like taking things apart and putting them back together," Puglia says. A strong interest in science led to his receiving the Bausch + Lomb Science Scholarship. Influenced by his father, an active investor, Puglia studied accounting and finance and graduated summa cum laude from the University of Notre Dame. He went on to analyze balance sheets and income statements during an auditing position at Peat Marwick and an internship in mergers and acquisitions at Salomon Brothers. He then earned his M.B.A. in finance and was named a Shermet Scholar at the University of Virginia's Darden School of Business, where his investing philosophy began to take shape.


Puglia's investment decisions begin with the research of roughly 200
T. Rowe Price analysts around the globe. He applies his own strict quality and growth criteria to their ideas, seeking blue chip companies that can maintain solid growth over long periods. Says Puglia, "We'd rather invest in a company that can consistently grow earnings at 15% than one growing at a 30% rate that we don't think is sustainable."

His investment process emphasizes free cash flow, an unusual approach for a growth manager. "Free cash flow typically is more important to value managers," Puglia acknowledges. "But we've found over time that it's an especially good predictor of investment performance in high-growth areas like technology. Growth companies tend to have attractive opportunities in which they can invest whatever excess cash they generate." Puglia also concentrates on the deployment of that cash.

Puglia notes that he learned early in his career to focus on the quality of management after a few unsuccessful investments in companies with attractive prospects but flawed personnel. "I discovered that there's no substitute for strong people," he says. "My father used to say, ‘It's important not just to learn from your mistakes—you have to learn more quickly than the competition.' That's what I try to do."

Photograph by SARMA OZOLS

1 The 1-, 5-, and 10-year and since-inception returns as of 6/30/12 were 7.01%, 2.42%, 6.30%, and 8.87% for the fund and 1.82%, 1.36%, 4.83%, and 6.87% for the Lipper Large-Cap Growth Funds average, respectively.

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, yield, and return will vary, and you may have a gain or loss when you sell your shares.

For the T. Rowe Price Blue Chip Growth Fund's (TRBCX) most recent month-end performance and up-to-date standardized returns, please
click here.

The fund's expense ratio was 0.77% as of its fiscal year ended 12/31/11. Figures include reinvested dividends.

1 Taking the time to review important accounts can help maintain your overall financial strategy.
2 Christine Fahlund, CFP®, a senior financial planner with T. Rowe Price, explains the role probate can play in your estate plan.
3Larry Puglia, portfolio manager of the T. Rowe Price Blue Chip Growth Fund.
4A blended portfolio for income and growth.
5Starting to save early with a 529 plan can help bring the cost of college within reach.
6 Contributing regularly and staying invested increases the growth potential of your assets over time.
7One of your biggest decisions is determining when and how to begin collecting your benefits.
8T. Rowe Price Connections; The T. Rowe Price Program for Charitable Giving; and more.
9Giving to causes that are important to you can be a rewarding part of your personal and financial life.
10An increasing number of companies are developing a long-term strategic view of the environmental impact of their products.
11Growing Opportunities in Developed and Emerging Markets.
12Six Steps to Help You Achieve Your