NWQ's First-Quarter Buys and Adds Affect Portfolio

May 26, 2015

Sometimes NWQ Managers (Trades, Portfolio)’ investment decisions fly under the radar, but they shouldn’t. NWQ’s approach has generated consistently high returns on a long-term basis.

That is evident in the returns from recent years. In 2014, NWQ generated a return of 13.71%, but that was below its return for 2012 (14.92%) and significantly below its return in 2013 (35.8%). It has more than $54 billion under management.

In the first quarter of 2015, NWQ Managers (Trades, Portfolio)’ new buys and adds had repercussions throughout its portfolio.

There were 16 new buys, the most significant of which may have been the investment in Discover Financial Services (DFS, Financial), an Illinois-based financial services company that issues the Discover credit card, the third-largest credit card in the United States. NWQ bought 2,270,889 shares for an average price of $59.21 per share. The acquisition had a 1.6% impact on NWQ’s portfolio.

That made DFS the 13th-most valuable stake in NWQ’s portfolio (nearly $128 million).

Although not as valuable as DFS, NWQ’s investment in Bank of America Corporation (BAC, Financial), a banking and financial services corporation based in Charlotte, North Carolina, influenced the portfolio in another way. Bank of America is the second-largest bank holding company by assets in the United States, and NWQ’s purchase of 3,245,680 shares for an average price of $16.06 per share made it the 19th-largest stake by volume in NWQ’s portfolio.

NWQ’s other new buys in the first quarter included Google Inc (GOOGL, Financial), La-Z-Boy Inc (LZB, Financial) and United Parcel Service Inc (UPS, Financial).

The greatest impact from additions to stakes that was felt by NWQ’s portfolio was its purchase of 1,742,997 shares of AbbVie Inc (ABBV, Financial), a Chicago-based research-oriented pharmaceutical company, for an average price of $60.41 per share. The deal had a 1.27% impact on AbbVie’s portfolio and made that stake the 25th-most valuable in that portfolio (more than $107.5 million).

NWQ solidified Lattice Semiconductor Corp’s (LSCC, Financial) grip on the designation of largest stake in its portfolio with the purchase of 1,500,703 shares of the Portland, Oregon-headquartered integrated circuit maker. NWQ bought the shares for an average price of $6.63 per share, a purchase that had a 0.12% impact on NWQ’s portfolio.

Lattice Semiconductor has a market cap of $707.8 million and an enterprise value of $886.53 million. It has a Price/Book of 1.8 and a Price/Sales of 2.0. George Soros (Trades, Portfolio), Jim Simons (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) have shares of Lattice in their portfolios. Joel Greenblatt (Trades, Portfolio) and Ronald Muhlenkamp (Trades, Portfolio) sold their stakes in the first quarter.

The addition of 985,594 shares of Sanofi (SNY) for an average price of $47.81 per share strengthened the Paris-based pharmaceutical company’s hold on fifth-most valuable stake in NWQ’s portfolio.

NWQ also added to its stakes in Suncor Energy Inc (SU, Financial), General Electric Co (GE, Financial), Royal Dutch Shell PLC (RDS.A, Financial) and Occidental Petroleum Corp (OXY, Financial).

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