The firm is characterized by carrying out a step-by-step research on companies and industries. This research is based on these companies and industries qualitative factors which include, but are not limited to, restructuring, management strength, shareholder orientation, among other issues. For research purposes, NWQ Managers focus on these three items: attractive valuation, downside protection and identifying catalysts and inflection points.
By looking at NWQ portfolio, I found the stock trading at very low P/E ratios.
Lincoln National Corp (LNC): NWQ kept the position unchanged
Lincoln National Corp. is a holding company involved in multiple insurance and investment management businesses. It is divided into the following segments: Life Insurance and Annuities; Lincoln UK; Reinsurance and; Investment Management.
The challenging environment where LNC operates has made it protect and build a capital base to reduce balance sheet risks. In relation thereto the company, thus, reduced common stock dividends, closed certain subsidiaries (the remaining ones´ positions were strengthened), issued common stock and debt. Furthermore, it provided liquidity to its holding company.
Now, the company is engaged in developing its product to raise its competitive position in small and mid-corporate markets. Moreover, given the new regulatory changes, it is capitalizing on opportunities.
Generally speaking, Lincoln National is clearly prepared for growth. Its A+, AA- , A2 and A+ ratings from A.M. Best, Standards & Poor s, Moody s and Fitch, respectively provide financial soundness.
General Motors Co (GM): NWQ kept the GM position unchanged
General Motors Company is the result of General Motors Corporation bankruptcy. It has 12 brands and operates under five segments: GM North America, GM Europe, GM South America, GM International Operations and GM Financial.
As regards GM´s performance, despite the economic crisis that has severally affected the industry, GM has been able to grow rapidly and recover. Actually, new models such as Buick's LaCrosse and Regal and the Chevrolet Cruze have been very successful.
Most importantly, GM is able to charge higher prices for its vehicles. This margin provides opportunities to offset the serious decline in light-vehicle sales.
Finally, GM is doing very well in Brazil and China, two emerging markets. Indeed sales outside North America represent 70%.
MetLife Inc (MET): NWQ increased MET position last quarter. Same as Eveillard, NWQ likes MET at the current price levels.
MetLife offers life insurance, annuities, and individual automobile and homeowners insurance, as well as group insurance, reinsurance, and retirement and savings products and services to corporations and institutions. All this makes MetLife leading insurance provider. MET does not only operates in the United States but it is also present in several foreign markets, including Latin America, East Asia, and Europe.
The insurance products from the segments where it works benefit from cross-selling opportunities. Generally speaking, MET has a more conservative strategy than its peers given its hedging programs and the fact that it has raised capital early.
Furthermore, MET has always engaged in long-term relationships with faithful customers. Last but not least, MetLife’s ALICO acquisition should provide it with substantial growth opportunities in key emerging markets.
Total SA (TOT): NWQ holds a very small position in TOT.
Total is an integrated energy company with oil and gas production. The company is one of the 10 largest chemicals companies in the world and operates a global refinery footprint with 1.9 million barrels of oil per day capacity.
Total is expected to take advantage from growth in production for the next 5 to 10 years thanks to an increase in its exploration activities, LNG and investment in new projects in the deepwater.
Total seems to be a sound operator in countries which are deemed risky, such as Iran, Russia and parts of Africa. Operations in these areas have yielded production and profits.
Avnet Inc (AVT): NWQ has been reducing AVT position in the previous quarters. NWQ slightly increased it in the last correction.
Avnet is a global distributor of semiconductors, embedded systems, computer products, software, and electrical connectors. Avnet connects suppliers and OEMs to thousands of manufacturers and resellers on a global basis.
In terms of strategy, Avnet is very savvy acquiring companies and integrating them into its business. This strategy has boosted sales and profitability in recent years. Moreover, AVT has acquired Access Distribution, which has helped extend its share in the market. The IT distribution model generates very strong cash flow throughout the entire industry cycle.