ATML Atmel Corp.

Ken Allen's wide-ranging investing style takes his fund from well-known products such as Microsoft Corp.'s (MSFT) Windows software to more esoteric subjects, like IPG Photonics Corp.'s (IPGP) fiber lasers.

The T. Rowe Price Science & Tech fund (PRSCX) manager relies on his understanding of tech sector trends and input from more than a dozen analysts to find value the broader market has overlooked. The result is a variety of stocks that has outperformed in recent years.

"Some good picks and savvy timing have helped the fund out recently," Morningstar analyst Kathryn Young said.

The fund had $2.6 billion in assets under management at the end of 2011. It is up about 2.2% over the past year, as of Jan. 25, while the Standard & Poor's 500 index is nearly 4.9% higher, according to Morningstar. It has outperformed the broader equity market and its category over the last three and five years. Morningstar rates the fund three stars out of five.

The fund got a boost from its sizable position in National Semiconductor Corp., Young said, which Texas Instruments Inc. (TXN) bought last year for a hefty premium. It also benefited from bets on Blackboard Inc., which was taken private by Providence Equity Partners, and Electronic Arts Inc. (EA), she added.

Among Allen's current picks is Microsoft, whose shares represent a relative bargain and are set to take off after it unveils a slate of products starting later this year, he said.

"They have a big catalyst in Windows 8, not just for computers and smartphones, but also their server product," he said. "Soon after that, the next version of Outlook is likely to be released. That's basically all of their profit."

Another company that stood out to Allen recently was IPG Photonics, a maker of lasers used in manufacturing. IPG's profit more than tripled in the first nine months of 2011 as its revenue surged 77%. But shareholders began selling it late in 2011, worried a potential economic slowdown would hinder the company.

Allen thought the company had enough promise to make it worth the risk. He bought shares at an average price in the mid-$40 range. IPG shares recently traded above $50.

Some of the fund's picks have more to do with finding companies that can capitalize on a particular trend. Much of Allen's interest in Google Inc. (GOOG) comes from its potential to benefit from the rise of mobile computing.

"Searches from smartphones and tablets have grown dramatically," he said. "People over-focus on whether a smartphone is an iPhone or an Android phone. Bottom line is, those people searching from a smartphone are searching from Google."

Atmel Corp. (ATML), a maker of components that power the touch screens of tablets and smartphones, is another beneficiary of the mobile computing boom, Allen said.

Atmel's technology is also used in new thin and light laptops that a host of computer makers are rolling out to challenge Apple Inc.'s (AAPL) MacBook Air. Allen sees these new computers as a big growth area for the personal computer market.

T. Rowe Price Science & Tech has taken positions in private companies in addition to its publicly traded holdings. The fund invested in daily-deal website operator Groupon Inc. (GRPN) and Chinese online video provider Youku Inc. (YOKU) before either company's initial public offering.

"I want to make sure all opportunities that are available are things that I'm looking at," he said.

Allen started managing the fund at the start of 2009 after serving as a software analyst for T. Rowe.

"Allen's short tenure on the fund causes some uncertainty, though that is somewhat allayed by his tenure as a software analyst prior to taking over the fund," Morningstar's Young said. "In addition, Allen's tendency to take big positions and hold around 40% of assets in the top 10 holdings could cause the fund to lag if he makes any missteps."

(Matt Jarzemsky covers technology companies for Dow Jones Newswires. He can be reached at 212-416-2240 or by email at matthew.jarzemsky@dowjones.com.)

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