Westport Asset Management

Westport Asset Management

Last Update: 02-11-2015

Number of Stocks: 53
Number of New Stocks: 1

Total Value: $979 Mil
Q/Q Turnover: 1%

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

Westport Asset Management Watch

  • Westport Buys Apparel Retailer Express During Q4

    Andrew J. Knuth founded Westport Asset Management (Trades, Portfolio) in 1983 with a focus on investing in small-cap companies for institutional clients.


    According to Westport’s website, the firm follows what it calls “second generation value investing.” With this strategy, the firm locates opportunities that are believed to be undervalued, identifies catalysts close to the valuation gap, which then produces investments that have attractive valuations and improving financial results.

      


  • Westport Asset Management’s Westport Select Cap Fund Third Quarter 2014 Commentary

    Portfolio Review


    During the third quarter, the Westport Select Cap Fund’s Class R shares fell 3.43%, ahead of the Russell 2000® Index’s loss of 7.36%. For the first nine months of 2014, the Westport Select Cap Fund’s Class R shares outperformed the Russell 2000® Index with a positive return of 1.34% compared to a decline of 4.41% for the Index.

      


  • Westport Fund Comments on American Eagle Outfitters & McCormick & Company

    Two portfolio holdings were eliminated in the third quarter of 2014 – American Eagle Outfitters, Inc. (AEO) and McCormick & Company, Inc. (MKC) as future returns were viewed as unlikely to reach the levels needed for retention in the portfolio.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Third Quarter 2014 Commentary.  


  • Westport Fund Comments on PetSmart Inc

    PetSmart, Inc. (PETM) (retailer of pet products and services) appreciated 17% in the quarter due to acceptable earnings and a board decision to evaluate “strategic alternatives,” including a sale of the company. This course of action was aggressively advanced by an activist investor.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Third Quarter 2014 Commentary.  


  • Westport Fund Comments on EOG Resources Inc

    Slowing growth in China, little growth in Europe and continued increases in U.S. oil production raise questions about the oil price needed to balance supply and demand. Not surprisingly, energy was the other major disappointing industry segment in the quarter, subtracting 98 basis points on a relative basis from Fund results versus its benchmark Index. While the share prices of all three energy portfolio holdings were down, EOG Resources, Inc. (EOG), after an excellent first half, decreased the Fund’s return by 107 basis points. In the first nine months of 2014 energy was the best performing industry segment and EOG Resources, Inc. contributed 57 basis points to the Fund’s return.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Third Quarter 2014 Commentary.  


  • Westport Fund Comments on FMC Corp

    Of the industry segments, Materials and Processing saw the poorest relative return versus the Index at a negative 109 basis points with the largest detractor, FMC Corp. (FMC) (agricultural and food products), at a negative 92 basis points. Drought in South America, compressed North American planting schedules and bumper crops of corn and soybeans have led to reduced applications and sales of agricultural chemicals.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Third Quarter 2014 Commentary.  


  • Westport Asset Management’s Westport Fund Third Quarter 2014 Commentary

    Portfolio Review


    As expected gross domestic product (“GDP”) rebounded from the first quarter 2014 contraction of 2.1%, expanding at a 4.6% rate in the second quarter. The recovery in GDP was broad-based with virtually all major components improving – personal consumption, fixed investment, inventory change, net exports and government expenditures. The Federal Reserve continued to taper its purchase of Treasury and mortgage-backed securities and signaled the quantitative easing program would end in October 2014. Anticipating the potential effects of economic weakness in Europe, Russian aggression in the Ukraine, further adjustments to economic policy in Japan and the transition in monetary policy by the Federal Reserve, investors reduced risk by decreasing equity commitments during the quarter especially among small and midcap equities.

      


  • Westport Select Cap Fund Comments on Zebra Technologies Corp

    The Fund made one new purchase during the quarter, Zebra Technologies Corp (ZBRA), Class A shares (“Zebra”). This company has established a leading position in data collection and product identification and announced the acquisition of a unit of Motorola Solutions, Inc. This deal will expand Zebra’s market position into mobile and network solutions while doubling the company’s size and adding significantly to its earnings per share.

    From Westport Asset Management (Trades, Portfolio)’s Westport Select Cap Fund Second Quarter 2014 Commentary.  


  • Westport Select Cap Fund Comments on Precision Castparts Corp

    Precision Castparts Corp. (PCP), the Fund’s second largest position, was off 6%, costing 61 basis points. There are questions regarding the future organic growth rate of the commercial aircraft industry and the company. This comes despite the company’s continuing profit improvement as it integrates recent acquisitions.

    From Westport Asset Management (Trades, Portfolio)’s Westport Select Cap Fund Second Quarter 2014 Commentary.  


  • Westport Select Cap Fund Comments on IPG Photonics Corp

    IPG Photonics Corp. (IPGP) fell 11.4 %, costing 81 basis points as investors continue to be concerned about second half demand from China for the company's precision laser products.

    From Westport Asset Management (Trades, Portfolio)’s Westport Select Cap Fund Second Quarter 2014 Commentary.  


  • Westport Select Cap Fund Comments on DeVry Education Group Inc

    DeVry Education Group, Inc. (DV), our for-profit education stock, rose over 19%, adding 117 basis points. The company’s diversification efforts have cushioned the negative impact of continued declines in student enrollments at the main operating unit, DeVry University.

    From Westport Asset Management (Trades, Portfolio)’s Westport Select Cap Fund Second Quarter 2014 Commentary.  


  • Westport Select Cap Fund Comments on Big Lots Inc

    The off-price retailer, Big Lots, Inc. (BIG), added 154 basis points. The company’s shares gained over 41% as new management’s merchandising changes showed early signs of success.

    From Westport Asset Management (Trades, Portfolio)’s Westport Select Cap Fund Second Quarter 2014 Commentary.  


  • Westport Select Cap Fund Comments on Universal Health Services Inc

    The second largest contributor to first half performance was Universal Health Services, Inc. (UHS), Class B shares, the fund’s largest position. The operator of acute care and mental health hospitals gained nearly 18% and contributed 182 basis points. First quarter earnings exceeded estimates, reflecting the early positive impact of the Affordable Care Act (also known as “Obamacare.”)

    From Westport Asset Management (Trades, Portfolio)’s Westport Select Cap Fund Second Quarter 2014 Commentary.  


  • Westport Select Cap Fund Comments on United Rentals Inc

    During the first half of 2014, four stocks contributed 1% or more to performance. The leader was United Rentals, Inc. (URI), which rose 34% and added 201 basis points iii. Already the largest factor in the rental of equipment used in non-residential construction, the company announced the acquisition of National Pump Company. This purchase will expand the company’s position in the fast growing energy sector, and is projected to be highly accretive to earnings.

    From Westport Asset Management (Trades, Portfolio)’s Westport Select Cap Fund Second Quarter 2014 Commentary.  


  • Westport Asset Management’s Westport Select Cap Fund Second Quarter 2014 Commentary

    During the second quarter, the Westport Select Cap Fund’s Class R shares rose 2.76%, ahead of the Russell 2000® Index’s gain of 2.05%. For the first six months of 2014, the Westport Select Cap Fund’s Class R shares outperformed the Russell 2000® Index with a return of 4.94%, compared to a return of 3.19% for the Index.


    Since inception 16½ years ago, the Westport Select Cap Fund has outperformed the Index by just under 3% points a year, with an annual average return of 10.54% to 7.67%, respectively.

      


  • Westport Fund Comments on Zebra Technologies Corp

    A new position was also established in Zebra Technologies Corp., Class A shares (“Zebra”) (ZBRA), a provider of industrial products used for data collection and automatic identification systems. When Zebra announced in mid-April that it would purchase the mobile-computing services unit of Motorola Solutions, Inc., its share price declined. Investors were concerned with the historical performance of this Motorola, Inc. unit, the fact that it was approximately the same size as Zebra and that the cash transaction would transform Zebra’s balance sheet from debt-free to heavily leveraged. Both companies offer bar code and radio frequency identification used to control inventories but service different end markets. The Motorola Solutions, Inc. unit will enhance mobile and network capabilities.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Second Quarter 2014 Commentary.  


  • Westport Fund Comments on Bed Bath & Beyond Inc

    Bed Bath & Beyond, Inc. (BBBY) was added to the portfolio after it provided a disappointing outlook for the remainder of the fiscal 2014 year. The focus of investor concerns is on the company’s ability to improve multi-channel sales by expanding its internet marketing capabilities. The company is a retail leader in domestic merchandise and household furnishings.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Second Quarter 2014 Commentary.  


  • Westport Fund Comments on MasterCard Inc

    The largest detractor among the Fund’s holdings was MasterCard, Inc., Class A shares (MA), at minus 45 basis points from a 12% decline in its share price. After an excellent performance in 2013 where earnings growth outpaced expectations and the stock price responded accordingly, 2014 has seen continued earnings growth but a reduction in the price/earnings multiple iii attached to those earnings. The imposition of financial sanctions against Russia for its annexation of Crimea raised questions about MasterCard Inc.’s long term presence in Russia and its earnings growth. However, the outlook is positive as transactions in many countries will continue to move from paper based systems for commerce to electronic transactions.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Second Quarter 2014 Commentary.  


  • Westport Fund Comments on Universal Health Services Inc

    Health care holdings were the second largest industry sector contribution to the Fund’s performance at 128 basis points, similar to the 138 basis points contribution of the health care sector to the Russell Midcap® Index. The best performer among the portfolio holdings in health care was Universal Health Services, Inc., Class B shares (UHS) which contributed 64 basis points to performance with an 18% return in the first half.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Second Quarter 2014 Commentary.  


  • Westport Fund Comments on Stone Energy Corp

    The best performing industry sector for the Westport Fund in this period was Oil & Gas Producers, which included three exploration and production companies. This sector provided 261 basis points to the portfolio return compared to the 105 basis points from the Energy holdings in the Russell Midcap® Index. … Stone Energy Corp. (SGY) provided a return of slightly more than 35% for the first half and added 27 basis points to the Fund’s performance. Continued growth in the world economy has been supporting oil prices and a very cold winter in the U.S. provided the impetus for higher natural gas prices.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Second Quarter 2014 Commentary.  


  • Westport Fund Comments on Anadarko Petroleum Corp

    The best performing industry sector for the Westport Fund in this period was Oil & Gas Producers, which included three exploration and production companies. This sector provided 261 basis points to the portfolio return compared to the 105 basis points from the Energy holdings in the Russell Midcap® Index. … Anadarko Petroleum Corp. (APC) contributed 84 basis points to the Fund’s performance on a return of 38% after settling the Tronox litigation that arose from its purchase of Kerr McGee Corp. in 2006.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Second Quarter 2014 Commentary.  


  • Westport Fund Comments on EOG Resources Inc

    The best performing industry sector for the Westport Fund in this period was Oil & Gas Producers, which included three exploration and production companies. This sector provided 261 basis points to the portfolio return compared to the 105 basis points from the Energy holdings in the Russell Midcap® Index. The domestic oriented company, EOG Resources, Inc. (EOG), returned 39% in the first half of 2014 and was the primary driver of the sector’s performance, contributing 157 basis points.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Second Quarter 2014 Commentary.  


  • Westport Fund Comments on Precision Castparts Corp

    The cancellation of a large order for Airbus A-350 aircraft by the United Arab Emirates caused investors to question the bright outlook for commercial aircraft production. Precision Castparts Corp. (PCP), a major supplier of aerospace components, saw its shares decline, decreasing portfolio return by 32 basis points in this period. These events appear transitory and should not have a long term impact on valuation.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Second Quarter 2014 Commentary.  


  • Westport Fund Comments on FMC Corp

    FMC Corp. (FMC) produced a negative 38 basis point return when it made an earnings preannouncement that a combination of compressed North American planting schedules and a severe drought in Brazil would reduce its sales of agricultural chemicals in the second quarter.

    From Westport Asset Management (Trades, Portfolio)’s Westport Fund Second Quarter 2014 Commentary.  


  • Westport Asset Management’s Westport Fund Second Quarter 2014 Commentary

    Economic growth as measured by gross domestic product contracted at the surprising rate of 2.9% in 1Q 2014 after a strong second half of 2013. Harsh winter weather and a revision to the estimated impact from the implementation of the Affordable Care Act (also known as “Obamacare”) account for much of the weakness. Recent economic statistics, especially employment, indicate a strong rebound. The economically weak first quarter and emphatic support for continuing near zero short term interest rates by the new Federal Reserve Chairwoman Janet Yellen saw the yield on the 10-year Treasury bond decline from 3.0% at year-end 2013 to 2.5% at June 30, 2014.


    Faced with declining rates on fixed income securities, investors sought equities with relatively high dividend yields – utilities and REITs. These two industry sectors provided returns of 19.2% and 17.3%, respectively, in the first half, the two highest among the ten industry sectors that comprise the Russell Midcap® Index and contributed 233 basis points i of the Index’s 867 basis point return. The Westport Fund Class R shares returned 486 basis points in the first half of 2014 with virtually no utilities or REITs among its portfolio holdings. The remaining shortfall of 148 basis points occurred in the final two weeks of the second quarter and was the result of investor concerns about the trajectory of future financial performance for some of the Westport Fund’s larger portfolio holdings. For example, FMC Corp (FMC). produced a negative 38 basis point return when it made an earnings preannouncement that a combination of compressed North American planting schedules and a severe drought in Brazil would reduce its sales of agricultural chemicals in the second quarter. The cancellation of a large order for Airbus A-350 aircraft by the United Arab Emirates caused investors to question the bright outlook for commercial aircraft production. Precision Castparts Corp. (PCP), a major supplier of aerospace components, saw its shares decline, decreasing portfolio return by 32 basis points in this period. These events appear transitory and should not have a long term impact on valuation.

      


  • Westport Asset Management Comments on Albemarle Corp.

    Albemarle Corp. (ALB) was sold when it became clear that the markets for a number of its products were unlikely to develop as planned.


    From Westport Funds First Quarter 2014 investor letter.

      


  • Westport Asset Management Comments on Core Laboratories

    And finally, Core Laboratories N.V. (CLB), a unique and highly regarded oil service company, was sold in January with a gain of 87% for the 15 month holding period. It was originally purchased when its share price experienced a sharp decrease after reporting disappointing earnings for the third quarter of 2012.

      


  • Westport Asset Management Comments on Brown & Brown

    Brown & Brown, Inc. (BRO), the insurance broker, was sold after it met its price objective and pricing for some insurance lines was viewed as unlikely to increase further, barring calamities that would consume large amounts of industry capital.

      


  • Westport Asset Management Comments on Bed Bath and Beyond

    Bed Bath and Beyond, Inc. (BBBY) was added to the portfolio during the quarter in response to a significant reduction in its stock price when it reported third quarter fiscal 2014 results and gave a disappointing outlook for the remainder of the fiscal year. Nonetheless, this premier provider of domestic merchandise and household furnishings remains a market leader and continues to improve its multi-channel sales (an expansion of internet marketing capabilities).

      


  • Westport Asset Management Comments on MasterCard Inc.

    The greatest disappointment in the quarter was from MasterCard, Inc. (MA) whose stock price declined 10.6% and negatively impacted performance in the quarter by 37 basis points. This negative performance is attributable to results for the fourth quarter of 2013 coming in below estimates. The company decided to invest additional money in support of new customers which reduced earnings. The outlook for MasterCard, Inc. and Visa Inc. is positive as the volume of business increases when countries move from paper based systems for commerce to electronic ones.

      


  • Westport Asset Management Comments on EOG Resources Inc.

    The exploration and production company EOG Resources, Inc. (EOG) was the primary driver for this sector's performance, contributing 63 basis points with a nearly 17% stock price gain for the quarter.

      


  • Westport Asset Management Comments on FEI Company

    The third large contributor was FEI Company (FEIC), a producer of electron microscopes, whose shares were up over 15% and added 104 basis points. The company continues to benefit from its unique market position and growing acceptance of new products.

      


  • Westport Asset Management Comments on DeVry Education Group Inc.

    DeVry Education Group Inc. (DV) was up over 19% and added 110 basis points. This for-profit education company reported December quarter earnings that exceeded analysts' estimates and indicated that new student enrollment at its largest operating unit could soon improve.

      


  • Westport Asset Management Comments on United Rentals Inc.

    In this environment, the Westport Select Cap Fund continued to perform well. Several issues stood out on the upside with three adding one percentage point or more to performance. United Rentals, Inc. (URI), the country's largest equipment rental company, gained over 21% in the quarter, adding 126 basis points***. The company continues to benefit from the gradual improvement in non-residential construction and the continuing trend to rent versus buy decisions on the part of major customers.

      


  • Westport Select Cap Fund First Quarter 2014 Commentary

    Portfolio Review During the first quarter the Westport Select Cap Fund (WPSRX)'s R shares rose 2.13%, ahead of the Russell 2000® Index's gain of 1.12%. Since inception 16 and a quarter years ago, the Westport Select Cap Fund R shares have outperformed by just under 3 percentage points a year, 10.52% to 7.65%, both compounded annually.


    Following last year's strong gains, it was not surprising to see the market struggle in the first three months of 2014. Compounding the usual concerns over the growth outlook, Federal Reserve policy, etc., Russia's annexation of Crimea added a geopolitical risk to the investment puzzle.

      


  • Westport Funds First Quarter 2014 Investor Letter

    Portfolio Review


    The U.S. economy strengthened in 2013, especially during the second half of the year. Current statistics suggest that economic growth continues in 2014 but at a rate diminished by the harsh winter weather in the first quarter. The return (gain plus dividends) from the Standard and Poors 500 Index in 2013 was 32.4% but earnings increased only 7% during the year. The remainder resulted from expansion in the valuation of those earnings through a higher P/E ratio****. The higher valuation of stocks and reduced clarity on earnings caused some investors to reassess expected returns for 2014 and to reduce equity exposure.

      


  • Westport Funds - Westport Select Cap Fund Fourth Quarter Commentary

    Portfolio Review During the fourth quarter the Westport Select Cap Fund's R shares rose 9.40%, ahead of the Russell 2000® Index's gain of 8.72%. For the year, the Select Cap Fund's R shares modestly trailed the Index with an increase of 37.22% compared to a return of 38.82% for the Russell 2000® Index. Since inception 16 years ago, the Select Cap Fund R shares have outperformed by just under 3 percentage points a year, 10.55% to 7.70%, both compounded annually. Obviously, 2013 was a remarkable year for small cap stocks. Only one other time in the past sixteen years has the Russell 2000® Index gained more than 30% and that was in 2003, but that year's gain followed a prior year loss of over 20%. By contrast, 2013's rise came after a more than 16% gain in 2012.


    In this environment the Westport Select Cap Fund performed well. None of the year-end portfolio holdings declined in value. In fact, the largest negative impact (0.51 basis points***) came from Forest Oil Corp., a position that was eliminated earlier in the year.

      


  • Westport Funds Comments on Universal Health Services

    In the case of Universal Health Services, Inc., the company i s likely to be one of the prime beneficiaries of expanding health care insurance coverage dictated by the Affordable Care Act * ** ( " Obama - care " ). Unique to Universal Health Services, Inc. (UHT) is its position in mental health services which account s for three - q uarters of its earnings before deductions for interest expense, taxes, depreciation and amortization .


     

      


  • Westport Asset Management Comments on Precision Castparts Corp.

    Precision Castparts Corp. (PCP) is a prime component supplier to the commercial aircraft manufacturers. Indicative of the attractiveness of this business was The Boeing Company ' s recent announcement that its year - end backlog was 5,080 planes compared to the 648 jets delivered in 2013. By the same token, Airbus ' (a subsidiary of Airbus Group NV) backlog at the end of November was 5,400 versus the 562 planes del ivered in the first eleven months of the year.


     

      


  • Westport Asset Management Comments on Radian Group Inc.

    One new position, Radian Group, Inc. (RDN), was established. One of the largest private mortgage insurance companies, Radian Group, Inc. should benefit from a recovery in the housing industry and from the Federal Housing Administration's gradual pull-back from the mortgage insurance market.

    From Westport Asset Management (Trades, Portfolio)'s fourth quarter 2013 commentary.  


  • Westport Funds Third Quarter Letter

    Dear Fellow Shareholder:

    The U.S. equity markets posted broad-based returns for the third quarter despite a high level of uncertainty created by both the Federal Reserve's failure to implement the much anticipated "tapering" of QE3 and concerns that Washington will be unable to quickly end the government shutdown and prevent a government default. The quarter ended with the Dow Jones Industrial Average*, the S&P 500® Index*, and the Nasdaq Composite Index* returning 2.12%, 5.24%, and 11.20% respectively. Market returns in the quarter were fueled by the continuing moderate U.S. economic expansion and the Federal Reserve's quantitative easing ("QE").  


  • Westport Asset Management Comments on Lender Processing Services Inc.

    The customers of Lender Processing Services, Inc. (LPS) are mortgage originators and servicers. The company supplies information technology "IT" to enable efficient mortgage processing and provides services that allow the customers to outsource many associated functions. Some of the services entangled the company in "robo signing" and the resulting lawsuits caused a sharp decline in its share price. In time most of the legal issues were resolved and its former parent Fidelity National Financial, Inc. decided the IT segment would enhance its product offerings, while substantial savings were available in merging its mortgage services with those of Lender Processing Services, Inc. Since the acquisition proposal is for cash and FidelityNational Financial, Inc. common stock, an analysis of Fidelity National Financial, Inc. was undertaken. The conclusion was that the new company is not attractive at this time. Consequently, holdings in Lender Processing Services, Inc. with a duration greater than one year were liquidated.

    From Westport Asset Management's second quarter 2013 letter.  


  • Westport Asset Management Comments on Precision Castparts

    Making the third largest contribution for the half was Precision Castparts Corp. (PCP), the components supplier to the aerospace industry. After being essentially flat in the first quarter, the stock rose over 19% in the second quarter, adding 177 basis points to performance. As we had anticipated, the shares rose as problems with Boeing's 787 were resolved.

    From Westport Asset Management's second quarter 2013 letter.  


  • Westport Asset Management Comments on Willis Group Holdings

    The second largest contributor to first half performance was Willis Group Holdings plc (WSH), the international insurance broker. The shares rose over 21% and added 204 basis points to performance. The company's business turnaround continues and could be accelerated by actions expected to be announced this quarter by the new CEO.

    From Westport Asset Management's second quarter 2013 letter.  


  • Westport Asset Management Comments on Universal Health Services Inc.

    By far the biggest contributor to first half performance was the Westport Select Cap Fund's largest holding, Universal Health Services, Inc. (UHS), Class B shares. This operator of acute care and mental health hospitals gained over 38% and contributed 393 basis points to performance. Once again investors focused on the company as a prime beneficiary of the 2014 implementation of the Affordable Care Act, known by most commentators as "Obamacare."

    From Westport Asset Management's second quarter 2013 letter.  


  • Westport Asset Management Comments on Time Warner Inc.

    The largest new commitment during the quarter was Time Warner, Inc. (TWX) whose businesses are the production of movies and video content for cable TV networks, TV series, and premium pay channel HBO. In addition, Time Warner, Inc. is spinning off its publishing unit later this year so the growth of the entertainment businesses will no longer be diluted. There is substantial interest from consumers and investors in streaming video sites accessed via the internet for a monthly subscription fee. Indeed, this is one of the key drivers in the performance of Netflix, Inc. shares this year. It is also attracting new entrants. With a new form of distribution and new distributors, quality programming should be increasingly valuable. Time Warner, Inc. is arguably one of the best producers of the needed content in a variety of formats.

    From Westport Asset Management's second quarter 2013 letter.  


  • Westport Asset Management Second Quarter 2013 Shareholder Letter

    The U.S. equity market indices recorded low single digit returns in the second quarter of 2013 as investors experienced higher levels of volatility during May and June. Both bond and stock prices declined and the U.S. ten-year Treasury Bond yield reached its highest level since 2011 during the last weeks of the period. The quarter ended with the Dow Jones Industrial Average*, the S&P 500® Index*, and the Nasdaq Composite Index* returning 2.91%, 2.92%, and 4.52% respectively. The increase in market volatility and interest rates was due to the comments by members of the Federal Open Market Committee (FOMC) during June that seemed to suggest that the central bank might scale back the pace of its bond purchases sooner than was expected. However, more recent comments indicate that any reduction in monetary stimulus efforts would require economic strength, improved unemployment and low inflation consistent with the scenario laid out by Chairman Bernanke in his news conference on June 19, 2013. In reaction the yield on the 10 year Treasury rose from 1.62% on May 2, 2013 to 2.49% on June 28, 2013.

    During the second quarter the Westport Select Cap Fund –Class R shares rose 2.74%, slightly trailing the Russell 2000® Index's gain of 3.08%. For the first six months, the Westport Select Cap Fund's R shares outperformed the Index with an increase of 16.19%, compared to a rise of 15.86% for the Russell 2000® Index. Since inception 15½ years ago the Westport Select Cap Fund has outperformed by just over 3% points a year, 9.72% to 6.71% both compounded annually. Data provided by Lipper, Inc., provides an interesting over-view of the Select Cap Fund's first half performance. In this context, we believe the Westport Select Cap Fund's performance was quite satisfactory. By far the biggest contributor to first half performance was the Westport Select Cap Fund's largest holding, Universal Health Services, Inc., Class B shares. This operator of acute care and mental health hospitals gained over 38% and contributed 393 basis points to performance. Once again investors focused on the company as a prime beneficiary of the 2014 implementation of the Affordable Care Act, known by most commentators as "Obamacare." The second largest contributor to first half performance was Willis Group Holdings plc, the international insurance broker. The shares rose over 21% and added 204 basis points to performance. The company's business turnaround continues and could be accelerated by actions expected to be announced this quarter by the new CEO. Making the third largest contribution for the half was Precision Castparts Corp., the components supplier to the aerospace industry. After being essentially flat in the first quarter, the stock rose over 19% in the second quarter, adding 177 basis points to performance. As we had anticipated, the shares rose as problems with Boeing's 787 were resolved. Two other positions contributed over 1% point to first half performance - FEI Company, a manufacturer of precision microscopes, rose nearly 32%, adding 173 basis points, and DeVry, Inc., our remaining for-profit education company, was up over 30% and contributed 139 basis points. On the negative side, most decliners had insignificant impacts. The only detractors from performance of note were IPG Photonics Corp., a leader in the manufacture of high power fiber lasers, and Forest Oil Corp., an independent oil & natural gas producer, which lowered performance by 55 and 50 basis points respectively. While there was no new merger and acquisition activity during the half, the previously announced acquisition of Plains Exploration & Production Company by Freeport-McMoRan Copper & Gold, Inc. was completed. The Fund received cash in exchange for its shares which resulted in a large long-term capital gain (proceeds of $49.01 per share versus our average cost of $18.34). During the second quarter portfolio changes included the elimination of the General Communication, Inc. –Class A position.  


  • Westport Funds Selects 1 Stock in Q2

    Westport Funds, a firm led by Andrew Knuth and Edmund Nicklin that has beat its index since inception, is having a strong year as well. The Westport Select Cap Fund has returned 22.06% from the start of the year through July 31, even through higher volatility in May and June. “A focus on the long-term and avoidance of short-term fads, even those that seem compelling, is a key factor in these long-term results,” the fund’s manager wrote in their second quarter shareholder letter.

    In Westport’s second quarter portfolio, released today, it reported one new purchase: Time Warner Inc. (TWX). The total portfolio contains 67 stocks and is valued at $1.03 billion.  


  • Westport Funds Quarterly Letter

    January 22, 2013

    Dear Fellow Shareholder:  


  • Westport Asset Management Makes Two Sells in Q3 Portfolio Update

    Milwaukee-based Westport Asset Management reported its portfolio updates for the third quarter that ended Sept. 30, a short list containing only one reduction and one complete sell of all its shares of one company, in addition to three increases in current shareholdings and one new holding – six transactions in total.

    The two companies in which Westport sold its shares are Fossil Inc. (FOSL) and General Communication Inc. (GNCMA). Both companies are ranked 4.5 out of 5 stars in Business Predictability on GuruFocus, as well as ranked 9 out of 10 in Profitability and Growth.  


  • Westport Asset Management and their top stocks : PCP, UHS, DV, WSH, BIG

    Westport Asset Management is an investment management firm located in Westport, Connecticut. Founded in 1983, the firm specializes in investing in small to mid sized capitalization companies. The fund is led by Andrew Knuth and Edmund Nicklin, career security analysts, and both holders of the CFA charter. The Westport Asset Management team primarily utilizes two funds, the Westport Fund (WPFRX), and the Westport Select Cap Fund (WPSRX) in their operations.  


  • Westport Asset Management Buys MSM, ROST, MA, CHKP, LH, WSH, FST, Sells DV

    Westport Fund has outperformed the market in eleven out of the last twelve years. Their 10 year cumulative return is 108%, while the market gained just 16.4%. This is the portfolio update for the first quarter of Westport.

    Westport Asset Management looks for companies selling at a substantial discount to their intrinsic value. Their investment process begins with the identification of change in a company’s products, operations, and management. Once change is identified, the portfolio managers evaluate the company from a number of perspectives including what the market is willing to pay for stock of comparable companies or what a strategic buyer would pay for the entire company. They may sell a stock sell a position if a negative change in the company's fundamentals has occurred since or was missed in its initial analysis. They also reanalyze the opportunity when a stock reaches a pre-determined price objective. This may indicate a sale of the stock is appropriate.  


  • Westport Asset Management RSG, SGY, LPS, CHKP, Sells KBR, AIR, ELMG, DBD

    Westport Asset Management just reported their fourth quarter portfolio. The firm likes to invest in undervalued companies with market cap between $2 and $10 billion. The firm’s flagship fund Westport Fund has achieved impressive performance since 1999. The fund outperformed the market every year except for 2006, when the fund underperformed by 2.5%.

    As of 12/31/2010, Westport Asset Management owns 64 stocks with a total value of $1.2 billion. These are the details of the buys and sells.  


  • Westport Asset Top Purchase (QLGS, JDAS, GWW) and Top Sells (ISIL, FOR)

    Over the course of the past 13 years, Westport Asset Management has made a name for itself in the mid-cap mutual fund arena. According to a report on the firm’s website, one of its fund – Westport Fund, through September 30, 2010, returned 6.86, 10.68, -0.34, 5.02, 6.48, and 9.81% during the past YTD, 1-, 3-, 5-,10-years, and since inception of 12/31/1997. The performance beat its benchmarks (Russell Midcap Index or Lipper Multi-Cap Core Index) by large margins, especially during the long term.

    Michael Breen of MorningStar had a favorable report on the fund about one year ago. Breen discussed the Fund Manager’s investment strategy:
    Manager Ed Nicklin is a long-term investor who likes firms compounding capital at high rates. He likes bargains but favors strong profitability over cheapness. The portfolio return on equity and net margin are 40% above the category average; its P/E is in line with it. The fund’s single-digit turnover rate implies a 10-year holding period, but Nicklin isn’t a buy-and-forget manager. He has consistently added value trading around existing names.
      


  • WestPort Letter on 4-Profit Educators; Top Holdings: PCP, UHS, DV, WSH, BIG, ESI

    Over the course of the past 13 years, Westport Asset Management has made a name for itself in the mid-cap mutual fund arena. According to a report on the firm’s website, one of its fund – Westport Fund, through September 30, 2010, returned 6.86, 10.68, -0.34, 5.02, 6.48, and 9.81% during the past YTD, 1-, 3-, 5-,10-years, and since inception of 12/31/1997. The performance beat its benchmarks (Russell Midcap Index or Lipper Multi-Cap Core Index) by large margins, especially during the long term.

    Michael Breen of MorningStar had a favorable report on the fund about one year ago. Breen discussed the Fund Manager’s investment strategy:
    Manager Ed Nicklin is a long-term investor who likes firms compounding capital at high rates. He likes bargains but favors strong profitability over cheapness. The portfolio return on equity and net margin are 40% above the category average; its P/E is in line with it. The fund’s single-digit turnover rate implies a 10-year holding period, but Nicklin isn’t a buy-and-forget manager. He has consistently added value trading around existing names.
      


  • Westport Asset Management Buys Teradata Corp., Republic Services Inc., Beckman Coulter Inc., Praxair Inc., Entergy Corp., Synopsys Inc.

    You may not know Westport Fund, but the fund has beaten S&P500 in 9 out of the last 10 years, all by significant margins. The fund managers like to buy companies with two proven characteristics: low valuation and improving financial fundamentals. This is the Q1 portfolio update.

    When do they sell? They sell if a negative change in the company's fundamentals has occurred since or was missed in its initial analysis or upon re-analysis when a stock reaches a pre-determined price objective.  


  • Westport Asset Management Buys Carter's Inc., Republic Services Inc., Pall Corp., Entergy Corp., Sells Energy Partners Ltd., Willis Group Holdings Ltd.

    Westport Fund has outperformed the S&P500 nine out of past ten years, and averaged more than 6% a year than the market. The firm uses a modified form of bottom-up value investing that combines classic value investment with forward-looking business analysis.

    Westport Asset Management buys Carter's Inc., Republic Services Inc., sells Energy Partners Ltd., Ishares Russell Midcap Index Fund, Willis Group Holdings Ltd. during the 3-months ended 12/31/2009. Westport Asset Management owns 68 stocks with a total value of $931 million. These are the details of the buys and sells.  


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