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Manning & Napier Low P/E Stocks: SuperValu (SVU), Goldman Sachs (GS), Mirant Corp. (MIR), WellPoint Inc. (WLP), Credit Suisse (CS)

May 12, 2010 | About:
Founded in 1970, Manning & Napier Advisors, Inc. ("Manning & Napier") serves clients in all 50 states and manages approximately $16 billion in client assets as of March 31, 2010. It remains an employee-owned firm, with 100% of the firm owned by full-time employees. Their website has a wealth of information about their funds and investment philosophy. Managing Director Patrick Cunningham states; "Our goal is to make sure people meet their investment objectives, not necessarily beating an index." They achieve this through three strategy points:

1. Absolute Return Orientation: Every client that Manning & Napier works with has something that they want their money to accomplish and the firm seeks to provide ideas built around those specific needs.

2. Management by Objectives: Every one of Manning & Napier's clients signs a four or five page document that states specifically what their money seeks to accomplish.

3. Risk Management: "Inherent in everything that we do at Manning & Napier is a recognition of risk... and, we will only buy a security when we think it is undervalued." Manning & Napier does not manage to a specific index and does not keep industry weightings that may be kept in a specific index.

This philosophy has helped the firm produce an average annual return of 6.11%, while the S&P 500 has actually lost ground since 2000. For more on their investment philosophy, watch the video:

http://www.manningnapieradvisors.com/public/insights_videoplayer.asp?id=1

Manning & Napier Advisors invest in stocks from a flexible standpoint using a bottom-up strategy that focuses on each individual company. To this end, Manning & Napier utilizes three basic strategies to find and buy what they feel are the right stocks.

1. Profile Strategy: This strategy focuses on strong growth in their industry and high profit margins. Companies that have a strategic competitive advantage found through long term trends.

2. Hurdle Rate Strategy: How Manning & Napier invests in cyclical industries. This is where they are looking for the strongest companies within a specific industry that is currently going through massive changes that are shaking out most of the poor investments.

3. Bankable Deal Strategy: This is how they invest in traditional value stocks, where Manning & Napier looks for companies that have stable assets and cash flow and are trading at 50 cents on the dollar to what they are really worth.

Right now the firm is heavily focused in technology, while in the last quarter they upped their weightings in Consumer Goods and decreased their weightings in Financials, Consumer Services, Health Care, Oil & Gas, and Industrials.

In their last perspective they mention; "While the economy seems to be building momentum, it is necessary to acknowledge risks that remain. In addition to difficult labor markets and weak wages, small businesses continue to struggle, and the potential for premature fiscal tightening should be monitored. All in all, the current wave of positive news regarding job gains and spending growth seems to be creating a fluctuation of optimism. However, a fluctuation of pessimism could also be around the corner."

More from their latest newsletter here: http://www.manningnapieradvisors.com/public/filedisplay.asp?DocID=1248

It seems that the company really doesn't care what the market does, because they are looking for great companies that are undervalued based on the Manning & Napier philosophy. Personally, I find that very good news for anyone that wants to follow their ideas.

For more details on Manning & Napier, go to http://www.gurufocus.com/ListGuru.php?GuruName=Manning+%26+Napier+Advisors,+Inc

In this article we would like to highlight some of Manning & Napier's best holdings based on their earnings yield and current price in the market. The reason these are very important is the same reason earning high returns on equity and investment capital is important. Manning & Napier owns 321 stocks with a total value of $15.66 billion.

Five of Manning & Napier Advisors Low P/E Stocks:

No. 1: SuperValu (SVU), Weightings: 0.02% - 228,020 Shares

No. 2: Goldman Sachs (GS), Weightings: 0.04% - 36,100 Shares

No. 3: Mirant Corp. (MIR), Weightings: 0.01% - 177,140 Shares

No. 4: WellPoint Inc. (WLP), Weightings: 0.05% - 117,930 Shares

No. 5: Credit Suisse (CS), Weightings: 0.01% - 39,660 Shares

No. 1: SuperValu (SVU)

SUPERVALU is one of the nation's largest supermarket retailer and largest food distributor. Supervalu Inc. has a market cap of $2.84 billion; its shares were traded at around $13.40 with a P/E ratio of 6.63 and P/S ratio of 0.07. The dividend yield of Supervalu Inc. stocks is 2.61%. Supervalu Inc. had an annual average earnings growth of 6% over the past 10 years. The company's book value is slightly higher than the company's stock price and despite last year’s massive loss; SVU has maintained a decade of profitability that it seems to be getting back to in 2010. They have an earnings yield of 13.70% based on their forward earnings estimates.

Manning & Napier Advisors owns 228,020 shares as of 3/31/2010, which accounts for 0.02% of the $15.66 billion portfolio.

No. 2: Goldman Sachs (GS)

Goldman Sachs is a global investment banking and securities firm, providing a full range of investing, advisory and financing services worldwide to a substantial and diversified client base, which includes corporations, financial institutions, governments, and high net worth individuals. Goldman Sachs Group Inc. The company has a market cap of $75.33 billion; its shares were traded at around $142.99 with a P/E ratio of 5.97 and P/S ratio of 1.46. The dividend yield of Goldman Sachs Group Inc. stocks is 0.98%. Goldman Sachs Group Inc. They had an annual average earnings growth of 12.7% over the past 10 years. Warren Buffett has continued to back the firm and it's easy to see why. The company has done a wonderful job of increasing both their sales and their net income over the last decade. The company carries a current earnings yield of 13%, which I feel is very justified. Obviously, Manning & Napier like the stock as well.

Manning & Napier Advisors owns 36,100 shares as of 3/31/2010, which accounts for 0.04% of the $15.66 billion portfolio.

No. 3: Mirant Corp. (MIR)

Mirant is a competitive energy company that produces and sells electricity in the United States, the Caribbean, and the Philippines. Mirant Corp. has a market cap of $1.51 billion; its shares were traded at around $10.5 with a P/E ratio of 2.84 and P/S ratio of 0.65. The company has consistently bought back their outstanding shares, while scaling back their assets and liabilities. Currently the company's book value (29.77) is close to 200% higher than the company's market price. They have an earnings yield of 15.50% based on their forward earnings estimates.

Manning & Napier Advisors owns 177,140 shares as of 3/31/2010, which accounts for 0.01% of the $15.66 billion portfolio.

No. 4: WellPoint Inc. (WLP)

WellPoint, Inc. is the largest publicly traded commercial health benefits company in terms of membership in the United States. WellPoint Inc. has a market cap of $22.61 billion; its shares were traded at around $50.94 with a P/E ratio of 8.06 and P/S ratio of 0.35. WellPoint Inc. had an annual average earnings growth of 21.6% over the past 10 years. Trading below book value, the company consistently maintains high returns on equity and the management has grown the company's book value from $9.25 to over $56 in the last decade. They have an earnings yield of 12% based on their forward earnings estimates.

Manning & Napier Advisors owns 117,930 shares as of 3/31/2010, which accounts for 0.05% of the $15.66 billion portfolio.

No. 5: Credit Suisse (CS)

CREDIT SUISSE GROUP and Winterthur offer investment products, private banking and financial advisory services, as well as insurance and pension solutions. Credit Suisse Group has a market cap of $47.69 billion; its shares were traded at around $40.22 with a P/E ratio of 8.67 and P/S ratio of 1.51. The dividend yield of Credit Suisse Group stocks is 2.99%. Credit Suisse Group had an annual average earnings growth of 39.9% over the past 10 years. This is a tremendous financial organization with over 1 trillion dollars worth of assets. They have had a spotty decade, yet with a current earnings yield of 13.4% and a price close to their 52 week low, the price may be right.

Manning & Napier Advisors owns 39.660 shares as of 3/31/2010, which accounts for 0.01% of the $15.66 billion portfolio.

The stocks highlighted above are only what I feel are the best ideas still mis-priced within this guru's portfolio. No one cares more about your money than you do. And, by using GuruFocus.com anyone can find stocks that fit their personal investment criteria. Remember, that you shouldn’t always follow the guru’s, but learn from both their mistakes and their success to become a better investor.

GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Manning & Napier for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.

The stock highlighted above are only what I feel are the best ideas still mispriced within this guru's portfolio. No one cares more about your money than you do. And, by using GuruFocus.com anyone can find stocks that fit their personal investment criteria. Remember, that you shouldn’t always follow the guru’s stock picks, but instead learn from both their mistakes and their success to become a better investor.

GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Manning & Napier for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.

About the author:

Jonathan Poland
Since 2002, I've worked with investors all over the world. Between 2009 and 2010 worked with GuruFocus to start their investment newsletter service.

Visit Jonathan Poland's Website


Rating: 3.0/5 (2 votes)

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