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.
GuruFocus tracks Wesstport’s US listed stock portfolio. Recently, the firm reported its 3Q10 holdings, and here are the top holdings of the company:
No. 1: Precision Castparts Corp. (NYSE:PCP), Weightings: 9.01% - 758,101 Shares
Precision Castparts Corp. is a worldwide manufacturer of complex metal components and products. Precision Castparts Corp. has a market cap of $19.57 billion; its shares were traded at around $137.56 with a P/E ratio of 20.8 and P/S ratio of 3.6. The dividend yield of Precision Castparts Corp. stocks is 0.1%. Precision Castparts Corp. had an annual average earning growth of 19.9% over the past 10 years.
In the Morningstar report, Michael Breen uses this top holding of Ed Nicklin’s to drive the point home:
Take top holding Precision Castparts PCP, a maker of metal parts. Nicklin steadily built his position from 2000 through 2005, even as the stock ran up. He harvested big gains in 2006 and 2007, cutting his stake nearly in half. When the stock cratered in late 2008 he bougt more, redoubling his stake. The stock has since gained more than 60%, but Nicklin was still buying it recently, saying acquisitions enhance the firm’s strategic edge
No. 2: Universal Health Services Inc. (NYSE:UHS), Weightings: 7.56% - 2,083,800 Shares
The principal business of Universal Health Services, Inc. Universal Health Services Inc. has a market cap of $4.05 billion; its shares were traded at around $41.71 with a P/E ratio of 16.5 and P/S ratio of 0.8. The dividend yield of Universal Health Services Inc. stocks is 0.5%. Universal Health Services Inc. had an annual average earning growth of 14.7% over the past 10 years. GuruFocus rated Universal Health Services Inc. the business predictability rank of 4-star.
No. 3: DeVry Inc. (NYSE:DV), Weightings: 5.86% - 1,275,000 Shares
DeVry Inc. owns and operates DeVry Institutes of Technology, DenverTechnical College, Keller Graduate School of Management and Becker Conviser CPA Review. Devry Inc. has a market cap of $3.31 billion; its shares were traded at around $46.79 with a P/E ratio of 11.4 and P/S ratio of 1.8. The dividend yield of Devry Inc. stocks is 0.4%. Devry Inc. had an annual average earning growth of 13.9% over the past 10 years.
This is the largest for-profit education stock in Westport’s portfolio. ITT Education Services is another example. On August 19, 2010, during the hot summer and heated debate on the sector, Westport set a letter of its shareholders. You can see the letter at the end of this article.
No. 4: Willis Group Holdings Ltd. (WSH), Weightings: 4.35% - 1,510,900 Shares
Willis Group is a global insurance broker providing specialized risk management, advisory, and other services to a broad range of corporate andinstitutional clients. has a market cap of $5.6 billion; its shares were traded at around $32.87 with a P/E ratio of 12.4 and P/S ratio of 1.7. The dividend yield of Willis Group Holdings Ltd. stocks is 3.2%. Willis Group Holdings Ltd. had an annual average earning growth of 8.3% over the past 10 years.
No. 5: Big Lots Inc. (NYSE:BIG), Weightings: 4.08% - 1,313,056 Shares
Consolidated Stores Corp. is one of the value retailers specializing in closeout merchandise and toys. Big Lots Inc. has a market cap of $2.28 billion; its shares were traded at around $30.18 with a P/E ratio of 11 and P/S ratio of 0.5. Big Lots Inc. had an annual average earning growth of 32.4% over the past 5 years.
No. 6: ITT Educational Services Inc. (ESI), Weightings: 3.82% - 582,848 Shares
ITT Education Services, Inc. is a proprietary provider of technical postsecondary degree programs in the United States based on student enrollment. ITT Educational Services Inc. has a market cap of $2.02 billion; its shares were traded at around $60.28 with a P/E ratio of 5.7 and P/S ratio of 1.6. Itt Educational Services Inc. had an annual average earning growth of 33.9% over the past 10 years. GuruFocus rated Itt Educational Services Inc. the business predictability rank of 5-star.
Read the letter on 4-Profit education providers:
WestPort on For-Profit Schools
To check out the firm’s other stock holdings, trading history, and recent picks, click on Westport Asset Management.