HOTCHKIS & WILEY

HOTCHKIS & WILEY

Last Update: 05-13-2016

Number of Stocks: 173
Number of New Stocks: 10

Total Value: $23,761 Mil
Q/Q Turnover: 7%

Countries: USA CAN
Details: Top Buys | Top Sales | Top Holdings  Embed:

HOTCHKIS & WILEY Watch

  • Bed Bath & Beyond Is a Serious Buy Right Now

    The 20% off standard has served the company well over the years, helping it grow from $3 billion in sales in 2002 to over $12 billion today. Just looking through Bed Bath & Beyond’s (NASDAQ:BBBY) 15-year financial record is impressive, but the past does not equal the future.


      


  • Hotchkis & Wiley Diversified Value Fund First Quarter Commentary

    The S&P 500 Index returned +1.35% during the first quarter of 2016, though it was anything but a steady trajectory. On February 11th, the S&P 500 Index was down by more than 10% for the year before recovering over the quarter’s final seven weeks. This date also represented a turning point in the value/growth cycle. From the beginning of the year through February 11th, S&P 500 Index stocks with the lowest price-to-book ratios (lowest quintile) underperformed the index -16.1% vs. -10.3%. From February 11th through the end of the quarter, however, this lowest valued quintile outperformed the index +16.2% vs. +13.0%. While it is too early to proclaim a new value cycle is upon us, it is noteworthy that such cycles have lasted between 5 and 8 years historically once they have taken hold—this would be a welcomed tailwind for our approach.


    In most market environments, some sectors/industries are coveted while others are shunned depending on the market’s disposition at the time. This behavior often results in a market that exhibits a bifurcation in stock valuations. Currently, this dichotomy is quite pronounced. Investors are fearful that the economic woes in China and other emerging economies will spill over into the US and other developed markets. This fear has caused investors to pay 20x earnings or more for the perceived safety of non-cyclicals like consumer staples or real estate and sell cyclicals like energy or industrials at a fraction of the valuation. We believe when “safe” stocks trade at excessive valuations they become risky, not safe, which is the market’s current paradox. Taking the long-term view, we see compelling risk-adjusted valuation opportunities in select market segments that have been shunned. Our bottom-up search for value in today’s market yields a portfolio that trades for 8.3x normal earnings and 1.2x book value, which represents a considerable discount to the Russell 1000 Value Index (13.2x and 1.7x, respectively) and an even larger discount to the S&P 500 Index (15.9x and 2.6x, respectively).

      


  • Hotchkis & Wiley Sells Out of Comstock Resources

    Hotchkis & Wiley sold its 4,669,830-share stake in Comstock Resources Inc. (NYSE:CRK) on March 31.


    Comstock Resources is based in Frisco, Texas, and is engaged in the acquisition, development, production and exploration of oil and natural gas with operations concentrated in Texas, Louisiana and Mississippi. The company's proven oil and natural gas reserve base is 91% natural gas and 9% oil and was 59% developed as of Dec. 31, 2015.

      


  • Hotchkis & Wiley Sells Stake in Most Heavily Weighted Sector

    Financial Services is the most heavily weighted sector in HOTCHKIS & WILEY’s portfolio, and the guru’s most noteworthy fourth-quarter transaction was in that sector, but it was a divestiture, not an acquisition.


    HOTCHKIS & WILEY sold its 2,466,713-share stake in Chubb Ltd. (NYSE:CB), an insurance and finance company based in Zurich, for an average price of $118.27 per share. The divestiture had a -1.21% impact on the guru’s portfolio.

      


  • Stocks Bring High Dividend Yields to HOTCHKIS & WILEY

    HOTCHKIS & WILEY has focused exclusively on finding and owning undervalued companies that have a significant potential for appreciation. Following are the stocks that have high dividend yields in that portfolio.


    Denbury Resources Inc. (DNR)

      


  • Hotchkis & Wiley Invests in International Paper, Packaging Corp. of America and Eaton

    Hotchkis & Wiley Capital Management LLC made a dozen new buys in the third quarter.


    Hotchkis & Wiley was founded in 1980 by John Hotchkis and George Wiley. They shared the belief that discipline and independent analysis are the keys to finding undervalued securities that have the potential for appreciation. For more than 35 years, Hotchkis & Wiley has been managing value portfolios for institutional and individual investors. Following are the stocks that got new positions in the portfolio during the third quarter.

      


  • Tom Gayner Buys Harley-Davidson and JPMorgan in 3rd Quarter

    Tom Gayner (Trades, Portfolio) is the executive vice president and chief investment officer of Markel Corp. (NYSE:MKL) and president of Markel Gayner Asset Management Inc. He thinks stock is part of a business, and the business is worth what the present value of the future cash flows are.


    His portfolio is composed of 122 stocks, and the following are the most heavily weighted trades during the third quarter.

      


  • Hotchkis & Wiley Sells Stake in UnitedHealth Group

    Hotchkis & Wiley was founded in 1980 and is based in Los Angeles. The firm follows a value strategy, focusing on important investment parameters such as a company's tangible assets, sustainable cash flow and potential for improving business performance.


    Hotchkis & Wiley sold the following stocks in the third quarter and had good gains of 83%, 62% and 52% from UnitedHealth Group, Lowe's Companies and Symetra Financial Corp.

      


  • HOTCHKIS & WILEY Buys More Than 7 Million Shares in Oil and Gas Company

    Since its founding in 1980, HOTCHKIS & WILEY has emphasized finding and owning undervalued companies with significant potential for appreciation. Its approach has regularly produced double-digit returns for its clients in recent years.


    HOTCHKIS & WILEY’s most noteworthy third-quarter transaction was its purchase of a 7,683,558-share stake in Hess Corp. (NYSE:HES), a New York-based oil and gas company, for an average price of $57.23 per share. The deal had a 1.54% impact on HOTCHKIS & WILEY’s portfolio.

      


  • 3 Investment Opportunities Both Insiders and Gurus Are Buying

    As I consider myself something of a cratedigger of a value investor, GuruFocus is a valuable source of information. I’m always looking for new ideas and one cool screen GuruFocus has is the Double Buy screen. It allows you to see which stocks have been bought by both gurus and insiders. Separately that is data I am already interested in but screening for both at the same time is beyond good. These are currently the top three stocks that come up on the screen:


    gurufocus.jpg

      


  • Insiders' Trades of the Week: Citizens Financial

    The All-In-One Screener can be used to find insider buys and sales over the last week by clicking on the Insiders tab and changing the settings for All Insider Buying/All Insider Selling to “$1,000,000+” and duration to "November 2015."


    According to the above filters, the following are the recent buys from company insiders in the past week.

      


  • A Look at Recent Insider Trades

    The All-In-One Screener can be used to find insider buys and sales over the last week by clicking on the Insiders tab and changing the settings for All Insider Buying/All Insider Selling to “$1,000,000+” and duration to "October 2015."


    According to the above filters, the following are the recent buys from company insiders in the past week.

      


  • Hotchkis & Wiley Diversified Value Fund Q3 Commentary

    The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Investment return and principal value of the fund will fluctuate, and shares may be worth more or less than their original cost when redeemed. Click quarter-end or month-end to obtain the most recent fund performance.


    Manager Commentary

      


  • HOTCHKIS & WILEY Sells Stake in Time Warner Cable

    HOTCHKIS & WILEY looks for undervalued companies with loads of potential in which to invest. “Our ability to deliver long-term performance is the key to our success,” the firm’s website proclaims. That success seems indisputable. The large cap value fund produced returns of nearly 40% year before last.


    HOTCHKIS & WILEY’s most noteworthy deal of the second quarter was its sale of a 2,918,984-share stake in Time Warner Cable Inc. (NYSE:TWC), a New York City-based cable telecommunications company. HOTCHKIS & WILEY received an average price of $165.41 per share in a transaction that had a -1.52% impact on HOTCHKIS & WILEY’s portfolio.

      


  • Madison Street Partners Buys Citigroup and Morgan Stanley

    Madison Street Partners LLC is a hedge fund based in Colorado founded by Steven Owsley in 2004. Its portfolio reported a total value of its portfolio of $74 million, with a decrease of 24% since the previous quarter. During 2015, Q2, it bought 20 new stocks and increased four of its existing stakes. The following are the most heavily weighted buys during the quarter.



      


  • Weekly CEO Buys Highlight: Shutterstock, Endurance Specialty Holdings, Opko, Air Products, KapStone

    According to GuruFocus Insider Data, these are the largest CEO buys during the past week. The overall trend of CEOs is illustrated in the chart below:


    Shutterstock Inc.: CEO and 10% owner Jonathan Oringer bought 200,000 shares

      


  • Kahn Brothers' Most Weighted Trades in Q2 2015

    Irving Kahn, along with brothers Alan and Thomas, founded Kahn Brothers (Trades, Portfolio) & Company, Inc., in 1978. The firm is a money manager and Registered Investment Advisor. Its principals manage approximately $1 billion of institutional and private funds.


    Its portfolio is composed of 40 stocks and has a total value of $593 million and the following are the most heavily weighted trades the hedge fund closed during the Q2 2015.

      


  • 5-year lows: Rowan Companies, Linn Energy LLC, Greif Inc, and Hatteras Financial Corp

    According to GuruFocus list of 5-year lows, these Guru stocks have reached their 5-year lows: Rowan Companies, Linn Energy LLC, Greif Inc, and Hatteras Financial Corp.


    Rowan Companies PLC (NYSE:RDC) Reached $16.79

      


  • Hotchkis & Wiley Large Cap Diversified Value Q2 2015 Commentary

    The S&P 500 Index returned a modest +0.3% during the second quarter of 2015 and is now up +1.2% since the beginning of the year. Growth and value performed similarly during the quarter but value stocks have lagged considerably over the past 12 months. Typically, such environments present a headwind for our value-focused strategy but we have managed to navigate the past twelve months satisfactorily considering the circumstances. Naturally, however, we would welcome a value tailwind which our experience has taught us should inevitably emerge in due course.


    Hotchkis & Wiley Large Cap Diversified Value

      


  • Hotchkis & Wiley Large Cap Diversified Value Q2 Market Commentary

    The S&P 500 Index returned a modest +0.3% during the second quarter of 2015 and is now up +1.2% since the beginning of the year. Growth and value performed similarly during the quarter but value stocks have lagged considerably over the past 12 months. Typically, such environments present a headwind for our value-focused strategy but we have managed to navigate the past twelve months satisfactorily considering the circumstances. Naturally, however, we would welcome a value tailwind which our experience has taught us should inevitably emerge in due course.


    The economic perils in Greece have reemerged as an important concern that is giving investors pause. The good news is that Greece is small, representing about 2% of the total economic output of all countries that use the euro as their currency. The primary risk for equity investors is that a Greek exit from the Eurozone sets a new precedent, and investors may ponder the possibility that a larger European economy (e.g. Italy, Spain) may share a similar fate if/when stressed, which could trigger economic turmoil throughout the region. Thus far, the market appears to perceive the Greece situation as largely quarantined—government bond spreads for other European periphery countries have remained relatively tight versus the German Bund. Nonetheless, we are monitoring the situation closely and have evaluated in detail each of our positions’ exposure to changes in the value of the dollar; we remain confident that we are not bearing unnecessary risk.

      


  • Five Stocks With Low P/E Gurus Are Buying (Part II)

    With these articles, thanks to the All-In-One screener of GuruFocusI give a selection of stocks that are trading with a very low P/E(ttm) ratio and that are catching the attention of multiple Gurus.


    Discover Financial Services (DFS)

      


  • Hotchkis & Wiley Adds to Banking, Insurance Stakes

    In its 35-year existence, value investor HOTCHKIS & WILEY has built its reputation on identifying undervalued companies that have great growth potential. But in the first quarter, most of its emphasis was on well-established companies, especially those in banking and insurance.


    HOTCHKIS & WILEY‘s most significant new buy in the first quarter was its investment in 2,604,383 shares of Chubb Corp (NYSE:CB), a New Jersey-based property and casualty insurer. HOTCHKIS & WILEY paid an average price of $101.24 per share in a deal that had a 0.92% impact on the portfolio.

      


  • Hotchkis & Wiley Large Cap Value Fund Q1 2015 Commentary

    Following six years of positive returns, the S&P 500 Index opened 2015 with a modest +1.0% return in the first quarter. The unprecedented corporate cost-cutting measures and general economic recovery following the financial crisis has fueled impressive earnings growth. Over the last six years, the S&P 500 is up +194% cumulatively. While such a rampant appreciation of market prices would normally give us pause, equity valuations are scarcely higher than historical averages due to these robust earnings.


    After six years of zero interest rate policy, investors are acutely focused on the Federal Reserve’s plan to taper its lax monetary policy. Equity investors are not fully insulated from such actions, however, we believe the effect on equities should be more subdued than many investors expect. Firstly, increasing interest rates are often correlated with positive economic developments, which is good for corporate cash flows. Secondly, long bond rates are a component of the cost of capital used to discount corporate cash flows. Fed tapering should impact short term interest rates disproportionately to long term rates, which already reflect expectations of a less intrusive Fed. Finally, the premium equity investors require above treasuries is considerably higher than historical averages. If interest rates rise, we may see a reversion of the equity premium back to normal levels, resulting in equity prices remaining stable despite higher interest rates.

      


  • Hotchkis & Wiley Keeps Buying Navistar

    Since its inception in Los Angeles in 1980, Hotchkis & Wiley (Trade, Portfolio) has focused exclusively on finding and owning undervalued companies that have a significant potential for appreciation. Hotchkis & Wiley are value investors focusing on important investment parameters such as a company's tangible assets, sustainable cash flow, and potential for improving business performance.


    Last quarter, Hotchkis & Wiley increased its position in Navistar (NYSE:NAV) by buying 1,305,300 shares. In the previous quarters also, the investment firm was seen buying Navistar's shares. The following chart shows its holding history in the company.

      


  • Hotchkis & Wiley First Quarter 2015 Large Cap Diversified Value Commentary

    Following six years of positive returns, the S&P 500 Index opened 2015 with a modest +1.0% return in the first quarter. The unprecedented corporate cost-cutting measures and general economic recovery following the financial crisis has fueled impressive earnings growth. Over the last six years, the S&P 500 is up +194% cumulatively. While such a rampant appreciation of market prices would normally give us pause, equity valuations are scarcely higher than historical averages due to these robust earnings.


    After six years of zero interest rate policy, investors are acutely focused on the Federal Reserve’s plan to taper its lax monetary policy. Equity investors are not fully insulated from such actions, however, we believe the effect on equities should be more subdued than many investors expect. Firstly, increasing interest rates are often correlated with positive economic developments, which is good for corporate cash flows. Secondly, long bond rates are a component of the cost of capital used to discount corporate cash flows. Fed tapering should impact short term interest rates disproportionately to long term rates, which already reflect expectations of a less intrusive Fed. Finally, the premium equity investors require above treasuries is considerably higher than historical averages. If interest rates rise, we may see a reversion of the equity premium back to normal levels, resulting in equity prices remaining stable despite higher interest rates.

      


  • 5-year lows: Extreme Networks Inc, Dynamic Materials Corp, Electro Scientific Industries, and LMI Aerospace Inc.

    According to GuruFocus list of 5-year lows, these Guru stocks have reached their 5-year lows: Extreme Networks Inc, Dynamic Materials Corp, Electro Scientific Industries, and LMI Aerospace Inc.


    Extreme Networks Inc (NASDAQ:EXTR) reached $2.42

      


  • Hotchkis & Wiley Commentary - Active vs. Passive Equity Investing

    The debate over active versus passive investing has spurred numerous studies, which in turn, have produced many thoughtprovoking theories on the subject. Despite countless data, sophisticated statistical techniques, and brilliant researchers tackling the issue, there are few palpable and universal conclusions one can draw from these studies. This is somewhat predictable given that these studies use unique data sources, evaluate different periods, and employ diverse statistical methods—not to mention are subject to human biases. As such, we are not brash enough to claim that we could conduct a better study as we would be subject to these same shortcomings, including our own biases. Rather than recreate analysis that has been recreated many times over already, we are going to focus on the few common findings from these studies that appear to be largely undisputed. We will first describe these conclusions, illustrate why they exist, and then explain why we believe markets are inefficient and why active management can add value net of fees.


    I. The Three Findings

      


  • Hotchkis & Wiley’s Large Cap Fundamental Value Q4 2014 Commentary

    Market Commentary


    Period ended December 31, 2014

      


  • Top 4 Undervalued stocks in Hotchkis & Wiley’s Portfolio

    Started in Los Angeles in 1980, Hotchkis and Wiley has focused exclusively on finding and owning undervalued companies that have a significant potential for appreciation.


    Web Page: http://www.hwcm.com/

      


  • Hotchkis & Wiley Adds to Third-Largest Stake

    Hotchkis & Wiley, a Los Angeles-based investment firm, has been successfully managing portfolios for more than 30 years. In 2013, its investment advice yielded a 39.95% return for its clients, more than double its performance in 2012.


    Value investors, Hotchkis & Wiley emphasizes a company's tangible assets, sustainable cash flow and potential for improving business performance.

      


  • Hotchkis & Wiley Value Opportunities Fund Q4 2014 Commentary

    MARKET COMMENTARY


    The S&P 500 Index returned +13.7% in 2014, its sixth consecutive positive year—the longest such streak since the mid to late 1990s. Unlike the extended bull market of the 1990s, which was driven by irrational growth expectations and swelling price-to-earnings multiples, the stock market’s rise over the past six years has been powered by broad corporate earnings growth. Moreover, household debt has been reduced by about 25% and corporate debt has been more than halved—an unprecedented deleveraging cycle that has de-risked the market considerably. Stock prices are up, earnings are higher, balance sheets are stronger, interest rates are lower, and inflation remains subdued. The U.S. economy has demonstrated clear progress though growth in Europe, Asia, and emerging markets has somewhat disappointed. Taking into account the confluence of these factors, we find the broad equity market reasonably valued for the risks at hand; it is neither especially compelling nor overextended. We have identified valuation opportunities selectively, as demonstrated by the portfolio’s discount to the market, but we remain highly reluctant to assume undue risk. The portfolio trades at 9.6x our estimate of normal/sustainable earnings compared to the S&P 500 Index trading at 16.6x normal earnings and 17.2x next year’s consensus earnings. We remain keenly focused not only on valuation support as a primary risk control, but also on strong balance sheets, sustainable cash flows, and prudent use of capital.

      


  • Hotchkis & Wiley Large Cap Fundamental Value Q3 Commentary

    The S&P 500 Index returned a modest +1.1% over the three months ended September 30th, the seventh consecutive positive quarter for the index. In August, the index closed above 2,000 for the first time, peaking at 2,011 in mid-September before a slight pullback. Unlike prior market peaks (e.g. 1999, 2007), elevated stock prices today are supported by both strong corporate earnings and an improving economic environment. At 16.5x forward earnings, the S&P 500 Index trades at a valuation slightly higher than the 25-year median of 16.0x. Meanwhile, the 10-year Treasury yields 2.5% versus the 25-year median of 4.8%; considering the low interest rate environment equity valuations appear reasonable. The U.S. housing market continues to recover, with new home sales considerably higher than consensus expectations and home prices on the rise. Higher home values create a wealth effect that boosts confidence and drives consumer spending, which accelerated during the quarter—consumer spending comprises two-thirds of U.S. GDP, so the housing market’s economic impact is material. Meanwhile, employment has steadily improved and inflation has remained in check. The U.S. dollar strengthened as a result of the productive economy, appreciating by more than 6% relative to a basket of major developed market currencies1. While the tense geopolitical landscape poses risks to the equity market, the earnings power of our portfolio holdings provides considerable valuation support. The portfolio trades at 10.8x our estimate of normal/sustainable earnings, a significant discount to the market average2.


    Concerns about decelerating growth in emerging markets triggered a precipitous decline in commodities over the quarter. Crude oil, natural gas, precious metals, most industrial metals, and most agricultural commodities declined considerably—some by more than 10%. Consequently, sectors exposed to commodity price changes lagged the overall market. Energy, utilities, and industrials were the only three S&P 500 sectors that declined during the quarter. Healthcare, technology, and telecommunications were the top-performing sectors, rising +3% to +5%. Value underperformed growth for the quarter, largely because energy is a larger weight and technology a smaller weight in value indices as compared with growth indices. Small cap stocks lagged large cap stocks by a wide margin in the quarter3. As of one year ago (9/30/13), small cap equities had outperformed large cap equities by more than 50 percentage points since the market bottom in March of 2009. This resulted in a large valuation premium for small cap stocks relative to large cap stocks compared to historical averages—this premium has eroded over the past twelve months toward levels more typically observed because small cap stocks have since underperformed.

      


  • News Corporation's Efforts to Change the Traditional Model

    In this article, let's take a look at News Corporation (NASDAQ:NWSA), a $9.1 billion market cap company, which is a diversified media company that has interests in newspapers, books and sports cable programming, and operates online properties, primarily in the United States, Australia and the United Kingdom.


    Business model

      


  • Hotchkis & Wiley Webinar Highlights - High Yield Outlook with Mark Hudoff

    On our October 22nd webinar, Mark Hudoff, portfolio manager of the Hotchkis & Wiley High Yield strategy, discussed the changing high yield environment and its impact on investors. The following recap highlights his views.


    Top Takeaways

      


  • Hotchkis & Wiley’s Large Cap Value Fund Q3 2014 Manager Commentary

    MARKET COMMENTARY


    The S&P 500 Index returned a modest +1.13% over the three months ended September 30th, the seventh consecutive positive quarter for the index. In August, the index closed above 2,000 for the first time, peaking at 2,011 in mid-September before a slight pullback. Unlike prior market peaks (e.g. 1999, 2007), elevated stock prices today are supported by both strong corporate earnings and an improving economic environment. At 16.5x forward earnings, the S&P 500 Index trades at a valuation slightly higher than the 25-year median of 16.0x. Meanwhile, the 10-year Treasury yields 2.5% versus the 25-year median of 4.8%; considering the low interest rate environment equity valuations appear reasonable. The U.S. housing market continued to recover, with new home sales considerably higher than consensus expectations and home prices on the rise. Higher home values create a wealth effect that boosts confidence and drives consumer spending, which accelerated during the quarter—consumer spending comprises two-thirds of U.S. gross domestic product, so the housing market’s economic impact is material. Meanwhile, employment has steadily improved and inflation has remained in check. The U.S. dollar strengthened as a result of the productive economy, appreciating by more than 6% relative to a basket of major developed market currencies1. While the tense geopolitical landscape poses risks to the equity market, we believe the earnings power of our portfolio holdings provides considerable valuation support. The portfolio trades at 10.8x our estimate of normal/sustainable earnings, a significant discount to the market average2.

      


  • Johnson Controls Trading at a Premium Compared to Peers

    In this article, let's take a look at Johnson Controls Inc. (NYSE:JCI), a leading manufacturer of automotive interior systems, automotive batteries and automated building control systems.


    Three in One

      


  • The Evolving High Yield Market - Hotchkis & Wiley Q3 Newsletter

    Given the recent volatility in high yield markets, we thought it would be useful to examine how the market has evolved since the 2008 financial crisis. Specifically, we will explore three major developments in the high yield market since the global financial crisis: 1) the role of Exchanged Traded Funds (ETFs), 2) trading/liquidity influences, and 3) the changing high yield investor base.


    I. The Role Of High Yield Exchanged Traded Funds

      


  • It Is the Right Moment to Bet On Yum

    In this article, let's take a look at Yum! Brands, Inc. (NYSE:YUM), a $30.98 billion market cap company, which is a global restaurant brand, with more than 40,000 units in more than 100 countries, including the KFC, Pizza Hut and Taco Bell chains.


    Core Brands

      


  • Hotchkis & Wiley Q2 Manager Commentary

    The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Investment return and principal value of the fund will fluctuate, and shares may be worth more or less than their original cost when redeemed. Click quarter-end or month-end to obtain the most recent fund performance.


    MARKET COMMENTARY
      



  • Hotchkis & Wiley Large Cap Value Fund June 2014 Manager Q&A

    An Interview with Sheldon Lieberman, Portfolio Manager


    Recently, Sheldon Lieberman, Portfolio Manager and 20-year member of the firm, shared his thoughts on the current equity markets and the Hotchkis & Wiley Large Cap Value Fund.

      


  • Hotchkis & Wiley Comments on Vodafone

    Stock selection in telecommunications also detracted from performance, as our lone position (Vodafone 3.0%*) lagged the market. Vodafone (VOD) reported modest results and a disappointing outlook due to elevated capital expenditures. Vodafone , Bank of America (BAC) (3.3%)*, and Target (TGT) (2.7%)* were the largest individual performance detractors.


    From Hotchkis & Wiley's Large Cap Value Fund Second Quarter 2014 Commentary.

      


  • Hotchkis & Wiley Comments on Oracle

    Stock selection in technology was the largest performance detractor for the quarter. Oracle (ORCL) (2.7%)* lagged after reporting results slightly below consensus estimates, though our investment thesis remains fully intact.


    From Hotchkis & Wiley's Large Cap Value Fund Second Quarter 2014 Commentary.

      


  • Hotchkis & Wiley Large Cap Value Fund Second Quarter 2014 Commentary

    Market Commentary


    Despite several bouts of geopolitical unrest, the S&P 500 Index gained +5.23% during the second quarter and has returned +7.14% since the beginning of the year. Equity investors appeared to largely dismiss both the Russia/Ukraine and Iraq/ISIS conflicts as economically inconsequential. In fact, the VIX Index, often used as a proxy for overall investor apprehension, reached a seven-year low in mid-June. Economic activity over the past quarter was positive and seems to have invigorated investor confidence. The unemployment rate fell to a post-financial crisis low, and now stands at 6.1% compared to 10.0% in late 2009. The housing market demonstrated signs of improvement, with new home sales reaching six-year highs and pending sales of existing homes reaching four-year highs. Corporate performance continued to be robust with more than 75% of S&P 500 Index companies exceeding consensus earnings estimates this quarter. In response to these developments, the Federal Open Market Committee’s official statement in mid-June struck a more optimistic tone than its late-April statement, which helped boost equity prices. With the VIX Index reaching a multi-year low, however, we would not be surprised to encounter stints of increased volatility in the near/medium term.

      


  • High-Yield Covenant Trends - Hotchkis & Wiley Second Quarter Newsletter

    Avoiding the Losers At Hotchkis & Wiley, we believe that averting mistakes is the single most important quality in successful high yield investing. We are not immune from making mistakes, but avoiding high defaults and low recovery rates is a key tenet of our strategy. This “avoid the losers” mentality is achieved by focusing on several factors. First, we have a preference for securities that are senior in the capital structure, i.e. we prefer senior or senior secured to subordinated bonds. Second, we emphasize asset coverage, where the value of the assets provides morethan- sufficient support. Covenant packages represent a third layer of defense that we believe is often overlooked.


    A tight covenant package guards against management behaviors that might be favored by equity shareholders or other stakeholders, but could put bondholders at risk. The level of conservatism exhibited by covenant packages varies with the credit cycle. When spreads rise and investors become more risk-averse, covenant packages tend to become more restrictive. Conversely, when spreads narrow and investors become less risk-averse, covenant packages tend to become lax. Today’s spread environment resembles the latter, so we thought analyzing covenant trends would be a productive exercise. This newsletter will attempt to identify broad trends in covenant packages by dividing covenants into three categories: 1) redemption flexibility; 2) negative covenants; and 3) change of control provisions.

      


  • Hotchkis & Wiley Large Cap Value Fund First Quarter 2014 Market Commentary

    Market Commentary


    The S&P 500 Index finished the first quarter of 2014 with a +1.81% return but experienced some turbulence along the way. In early February, the S&P was down nearly 6% for the year, fueled by developments in several of the largest emerging market economies. Chinese manufacturing slowed and the country’s banking regulator signaled increased credit scrutiny. Also, Argentina devalued its peso triggering a selloff in several other emerging market currencies, revealing that contagion is alive and well. This rattled US equity investors, sending the VIX Index from 14 at the beginning of the year to 21 in early February.

      


  • Weekly CEO Buys Highlight: LGCY, OPK, FELP, FULL, ENH

    According to GuruFocus Insider Data, these are the largest CEO buys during the past week. The overall trend of CEOs is illustrated in the chart below:



    Legacy Reserves LP (NASDAQ:LGCY): Chairman, President and CEO Cary D Brown Bought 200,000 Shares

      


  • A Look at a Global Multi Industrial Company

    In this article, let's take a look at Johnson Controls Inc. (NYSE:JCI), a leading manufacturer of automotive interior systems, automotive batteries and automated building control systems.


    Joint Venture and Partnership

      


  • Hotchkis & Wiley First Quarter Newsletter - 'Frequently Asked Questions'

    The opportunity to visit with clients and prospects with exceptionally diverse backgrounds and personalities is one of the most interesting facets of our job. No two meetings are the same, and the thought-provoking discussions ensure that our profession never goes dull. Question topics range from broad market views to credit-specific details, with everything in between. In this newsletter, we address the questions that seem to be asked most frequently and/or we believe are particularly relevant in the current market environment.


    In your opinion, is the current high yield market compelling? Relative to history, high yield valuations are less attractive than average but high yield fundamentals are more attractive than average (technicals are average). Also, the forward yield curve provides some reason for caution. Our collective view on the high yield market, therefore, is positive but tempered. Valuations

      


  • Hotchkis & Wiley Comments on IBM

    We took a new position in IBM (NYSE:IBM) (1.5%)*, which we believe is a well-positioned, diversified technology company with a strong balance sheet, prudent capital allocation, and an attractive valuation.


    From Hotchkis & Wiley's fourth quarter 2013 manager commentary.

      


  • Hotchkis & Wiley Large Cap Value Fund Fourth Quarter Manager Commentary

    The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Investment return and principal value of the fund will fluctuate, and shares may be worth more or less than their original cost when redeemed. Click quarter-end or month-end to obtain the most recent fund performance.


    Manager Commentary Period ended December 31, 2013

      


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