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:
The firm invests 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:
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 Advisors best holdings based on GuruFocus' predictability rating and the current fair value from our DCF calculator using current estimates and book values from the latest quarterly statement. Manning & Napier owns 321 stocks with a total value of $15.66 billion.
Best Of Manning & Napier Advisors Predictable Stocks:
No. 1: Cameco Corp. (NYSE:CCJ), Weightings: 0.59% - 3,393,460 Shares
No. 2: Mediacom Communications Corp (MCCC), Weightings: 0.02% - 643,390 Shares
No. 3: McGraw HIll Companies (MHP), Weightings: 0.04% - 187,788 Shares
No. 4: Novartis AG (NYSE:NVS), Weightings: 0.02% - 53,430 Shares
Since the GuruFocus.com DCF Calculator works best with companies with predictable earnings, the following stocks have been run through the calculator for current fair value estimates.
No. 1: Cameco Corp. (NYSE:CCJ)
Cameco Corporation is the world's largest publicly traded uranium company and a growing gold producer. Cameco Corp. has a market cap of $9.22 billion; its shares were traded at around $23.48 with a P/E ratio of 16.65 and P/S ratio of 4.17. The dividend yield of Cameco Corp. stocks is 1.13%. Cameco Corp. had an annual average earnings growth of 23.6% over the past 10 years. GuruFocus rated Cameco Corp. the business predictability rank of 4.5-star. The company has an $11.96 book value and while trading close to its year low, still offers a 23% margin of safety based on their forward earnings estimates. You may want to wait and see if the price comes down.
Manning & Napier Advisors owns 39.660 shares as of 3/31/2010, which accounts for 0.01% of the $15.66 billion portfolio.
No. 2: Mediacom Communications Corp (MCCC)
Mediacom Communications is the nation's eighth largest cable television company and one of the cable operators focused on serving the smaller cities and towns in the United States. Mediacom Communications Corp. has a market cap of $357.28 million; its shares were traded at around $5.27 with a P/E ratio of 7.42 and P/S ratio of 0.24. Mediacom Communications Corp. had an annual average earnings growth of 14.2% over the past 10 years. GuruFocus rated Mediacom Communications Corp. the business predictability rank of 5-star. The company has a $3.92 book value and offers a 60% margin of safety based on their forward earnings estimates of $0.83. Of course, I'm not convinced that it deserves to be in the "predictable company" category considering they've only earned money in 2 out of the last 10 years. However, the past doesn't predict the future, so if they continue to earn money going forward, the $5 price is very cheap.
Manning & Napier Advisors owns 643,390 shares as of 3/31/2010, which accounts for 0.02% of the $15.66 billion portfolio.
No. 3: McGraw HIll Companies (MHP)
McGraw-Hill Companies Inc. serves business, professional and educational markets around the world with information products and services. The McGraw-Hill Companies Inc. has a market cap of $9.54 billion; its shares were traded at around $30.28 with a P/E ratio of 12.16 and P/S ratio of 1.6. The dividend yield of The McGraw-Hill Companies Inc. stocks is 3.1%. The McGraw-Hill Companies Inc. had an annual average earnings growth of 8.4% over the past 10 years. GuruFocus rated The McGraw-Hill Companies Inc. the business predictability rank of 4.5-star. With a forward EPS estimate of $2.66 and a book value of $6.02, the stock offers a 33% margin of safety at its current price. McGraw Hill has had a very strong decade of growth in earnings and book value. Plus, this is a company Warren Buffett likes because of their ability to earn a ton of money on their equity. With a decent earnings yield, MHP may be a good buy.
Manning & Napier Advisors owns 187,768 shares as of 3/31/2010, which accounts for 0.04% of the $15.66 billion portfolio.
No. 4: Novartis AG (NYSE:NVS)
Novartis AG is committed to improving health and well-being through innovative products and services. Novartis Ag has a market cap of $107.67 billion; its shares were traded at around $47.06 with a P/E ratio of 12.75 and P/S ratio of 2.43. The dividend yield of Novartis Ag stocks is 3.51%. Novartis Ag had an annual average earnings growth of 14.2% over the past 10 years. GuruFocus rated Novartis Ag the business predictability rank of 5-star. Novartis offers a very solid 10% earnings yield along with a 53% margin of safety; both great for any type of investor. Considering the recent sell off, these shares may be at a good value.
Manning & Napier Advisors owns 53,430 shares as of 3/31/2010, which accounts for 0.02% of the $15.66 billion portfolio.
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 learn from both their mistakes and their success to become a better investor.
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About the author:
I write about stocks that look interesting to me based on 15+ years of experience in the capital markets. I rarely write about stocks that I own personally or through my company. My views are my own.