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.
In the firm’s 3Q10 letter to shareholders, fund managers made some bullish comments towards the things to become:The major U.S. market indices rallied during the month of September following significant declines in August. With September’s rally, the third quarter ended with strong returns for the Dow Jones Industrial Average, the S&P 500® Index, and the Nasdaq Composite Index of 11.1%, 11.3%, and 12.6% respectively. While the investment landscape during the quarter was dominated by political and economic uncertainties, investor confidence appeared to improve as the probability that the economy would experience a double dip recession seemed to diminish. The outlook for the economy was strengthened by the Federal Reserve’s commitment to implement another round of quantitative easing. It is likely that the current economic expansion will continue, albeit at a sluggish pace, based on the Fed’s continuing intervention as well as the positive outlook for corporate earnings in the fourth quarter.
GuruFocus tracks Wesstport’s US listed stock portfolio. Recently, the firm reported its 3Q10 holdings, and here are the top purchases and top sells of the company during the quarter:
No. 1: QLogic Corp. (QLGC), Add: 0.21% of the portfolio - Total: 803,209 SharesQLogic Corporation simplifies the process of networking storage for OEMs, resellers and system integrators with the only end-to-end infrastructure in the industry, consisting of award-winning controller chips, host bus adapters, network switches and management software to move data from the storage device through the fabric to the server. Qlogic Corp. has a market cap of $1.96 billion; its shares were traded at around $17.97 with a P/E ratio of 18.34 and P/S ratio of 3.58. Qlogic Corp. had an annual average earning growth of 6.9% over the past 10 years.
No. 2: JDA Software Group Inc. (JDAS), Add: 0.16% of the portfolio - Total: 276,000 SharesJDA Software Group, Inc. is a provider of software solutions designed specifically to address the supply chain management, business process, analytic application and e-commerce requirements of the retail industry. Jda Software Group Inc. has a market cap of $1.1 billion; its shares were traded at around $26.26 with a P/E ratio of 17.74 and P/S ratio of 2.85. Jda Software Group Inc. had an annual average earning growth of 15.1% over the past 10 years.
No. 3: W.W. Grainger Inc. (NYSE:GWW), Add: 0.08% of the portfolio - Total: 43,872 SharesGrainger offers a breadth of MRO solutions by combining products, services, and information. W.w. Grainger Inc. has a market cap of $8.93 billion; its shares were traded at around $125.78 with a P/E ratio of 19.62 and P/S ratio of 1.43. The dividend yield of W.w. Grainger Inc. stocks is 1.72%. W.w. Grainger Inc. had an annual average earning growth of 12.7% over the past 10 years. GuruFocus rated W.w. Grainger Inc. the business predictability rank of 2.5-star.
No. 1: Intersil Corp. (NASDAQ:ISIL), Sell: 0.06% of the portfolio - Total: 0 SharesIntersil Corporation is a leader in the design and manufacture of high-performance analog semiconductors. Intersil Corp. has a market cap of $1.62 billion; its shares were traded at around $13.06 with a P/E ratio of 14.04 and P/S ratio of 2.64. The dividend yield of Intersil Corp. stocks is 3.68%. Intersil Corp. had an annual average earning growth of 10.6% over the past 10 years.
No. 2: FORESTAR RE GROUP (NYSE:FOR), Sell: 0.42% of the portfolio - Total: 0 SharesForestar Group, Inc. formerly known as Forestar Real Estate Group Inc. Forestar Re Group has a market cap of $665.83 million; its shares were traded at around $18.28 with and P/S ratio of 4.55.
You can see Westport is a firm churning its portfolio ever so slowly.
Check out the firm’s complete stock portfolio by clicking on Westport Asset Management.