The total value of his portfolio at quarter-end stands at $1.1 billion, with 122 stocks in total. Financial services, the most-represented sector, has a 35% weighting in the portfolio, followed by consumer cyclical, at 19.5%.
According to Schneider’s investment strategy for his flagship Schneider Value Fund (SCMLX), he focuses on common stocks of companies with market capitalization of at least $1 billion that appear undervalued and have potential for positive fundamental change.
Overview of the Largest New Buys
AIG Inc. (NYSE:AIG)
Schneider purchased 163,080 shares of American International Group (NYSE:AIG) for $38 per share in the first quarter of 2013. AIG shares have gained 9.7% from his average purchase price, at $41 on Monday.
AIG, international insurance organization that has recently returned to public ownership after the U.S. government rescued it from collapse in 2008, reported a net loss of $4.4 billion in the fourth quarter of 2012, after earnings of $21.5 billion in the prior-year quarter. The loss was due to the sale of 90% of International Lease Finance Corporation to an investor group in a deal scheduled to close in the second quarter of 2013. Book value increased 15.5% to $57.87, and revenue of $12.4 billion, down from $17.4 billion in the prior-year quarter and $17.65 billion in the previous quarter.
AIG’s P/S ratio is up to near its highest level in five years, at 1.05. The company also has a P/E (ttm) of 17.8 and P/B of 0.6.
Morgan Stanley (NYSE:MS)
Schneider bought 34,110 shares of Morgan Stanley for an average cost of $22 per share in the first quarter. The company’s shares have declined 2% from his average price, at a price of $21.79 on Monday.
Morgan Stanley, a global financial services firm, produced net revenue of $8.2 billion in the first quarter, an increase from $6.9 billion a year previously, which continued to be negatively impacted by the tightening of its debt-related credit spreads. Net income totaled $594 million in net income, after a $250 million loss a year previously. EPS was $0.50 per share, after an earnings loss per share of $0.05 a year previously. The company is almost in the midst of reducing its non-strategic risk weighted assets in its fixed income and commodities businesses, and continued its path toward ownership of the remainder of its Morgan Stanley Wealth Management Joint Venture with Smith Barney, which it is purchasing from Citigroup and plans to complete by 2015.
Wet Seal Inc. (WTSL)
Schneider purchased 161,237 shares of Wet Seal for $3 per share on average in the first quarter. The stock has since increased 8% from his average price, to $3.14 on Monday.
Wet Seal, a fashion retailer with 530 stores in the U.S. and Puerto Rico, sold $161.7 million in the fourth quarter of 2012, down slightly from $163.2 million a year previously, as consolidated comparable store sales declined 8.3%. Its net loss was $85.8 million, or $0.97 per diluted share, compared to net earnings of $1.1 million, or $0.01 per diluted share the previous year. The company at year end held $110 million in cash and no debt. The results come after Wet Seal replaced its board in the third quarter. The company is expecting further sales declines in the first quarter of fiscal 2013, and a net loss per share, primarily due to fees from employee-related litigation.
STR Holdings Inc. (STRI)
Schneider bought 78,784 shares of STR Holdings Inc. for $2 per share on average in the first quarter. STR Holdings shares have since increased 1%, to trade for $2.29 on Monday. They are down 83% since 2009.
STR Holdings, which invented and manufactures solar panel encapsulants with the brand name Photocap, had net sales of $16.1 million in the fourth quarter, a 30% decline from the previous quarter and 56% from the previous year. The sales drop came primarily from declines in volume and average sale price. The company’s net loss was $123.4 million, or $2.97 per diluted share, increased from a net loss of $68.5 million, or $1.67 per diluted share, a year previously. The company also generated $5.1 million in free cash flow and retains $82 million in cash, with no debt. The declines in results reflect continued softness in the solar energy industry, due primarily to negative policy changes, particularly in Italy and Germany. STR Holdings continues to develop its next-generation encapsulant product and has secured two new customers in China and orders from an existing customer in Europe.
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