Analyst's Goal is to Make 25 Percent Annual Gain

Like a lot of money managers, Bryan Perry is seeing many more clients coming into his office seeking ways to boost their investment income.

Many are new retirees rolling over 401(k) funds from their former employer. Others are recent widows or widowers who've received large insurance checks and want to invest the proceeds for the highest return.

In both cases, they need more income than CDs and money market funds now offer. Among his retired clients, he said, many are discovering that if they earn only 4 percent to 5 percent on their investments, they will be forced to tap into their principal to meet their rising cost of living."

Perry, an analyst for ChangeWave Research in Maryland, says he's spent five years researching ways to boost investment income. He believes he's found the answer, which he calls "strategic high-income investing."

His investment goal is to earn a whopping 25 percent a year: 10 percent in dividends and 15 percent through price appreciation.

Perry, 46, who has been in the money management business for 21 years, has worked for several Wall Street brokerage houses, including Smith Barney, Bear Stearns and Lehman Brothers.

He says that earning 10 percent yields is not as difficult as it once was because "there are a number of hybrid securities that have been structured in recent years to do just that."

Among his asset classes of choice are Canadian royalty trusts, closed end mutual funds, convertible securities, preferred stocks, master limited partnerships and real estate investment trusts, particularly those that lease office and industrial space to the biotech industry.

When he invests in common stocks, Perry prefers such industries as oil and gas, coal, tobacco, iron ore, copper and finance.

Perry also is a strong believer in rotating investments among various sectors, which he says helps him stay on top of changes in the market and helps him earn 15 percent price appreciation.

By investing in several industries and across a number of asset classes, Perry says he doesn't put any more than 3 percent to 4 percent in any single stock, bond or other investment.

Using this strategy, Perry says the combined value of all the assets he manages rose 17 percent last year and 25 percent in 2003. For 2005, he says he's up 11 percent year to date.

Among Perry's list of favorite investments:

Apollo Investment Corp. (AINV) - The management investment company, with a yield of 9.3 percent, arranges bridge loan financing for public and private companies. Apollo, which was formed in 2004 and trades on the Nasdaq, typically invests in thinly held public companies.

BP Prudhoe Bay Royalty Trust (BPT) - The trust, which trades on the New York Stock Exchange, has a yield of 13 percent and has been raising its dividend recently. It holds overriding royalty interest in oil production from Alaska's Prudhoe Bay, one of the largest oil-producing areas in North America.

Great Northern Iron Ore Properties (GNI) - Trading on the NYSE, the stock offers a yield of 9.1 percent. The company leases and manages mineral properties in Minnesota, including sizable holdings on the Mesabi Iron Range. This is a thinly traded stock that has ranged between $93 and $142.09 over the past 52 weeks. Perry calls it a well-managed company that is benefiting from the rise in commodity prices.

Ferrellgas Partners LP (FGP) - The limited partnership trades on the NYSE and sports a current yield of 9.3 percent. The company distributes propane and related equipment to residential, industrial and agricultural customers in the United States.

Looking ahead, Perry says some mortgage REITs also could be worth buying. "They were crushed over the past six months, and now they're down 30 to 40 percent in value. At some point, they will be good buys. But not now."

Contact: Darlene March - 949-975-1858, ext. 260
Email: darlene@changewave.com