Manning & Napier is a more than 40-year-old management
firm with about $44.7 billion in assets under management and 5.7%
average annual return since inception. The firm bought 49 new
stocks for their portfolio of 361 stocks in the second quarter. A
key to their second quarter view of the economy is stated in
their second quarter letter:
During challenging market environments in the past, our
disciplined investment process led us to position clients in
areas that often raised the eyebrows of outsiders. Sometimes we
looked foolish at first, but eventually our strategy and
conviction paid off. Applying this same process today, in a slow
growth environment, we believe rational investors should be
willing to ascribe a higher value to businesses with strong
growth prospects. In our view, positioning clients in companies
that can achieve organic growth will protect clients from the
greatest risk in today's environment-reinvestment rate risk-and
as such will prove to be the winning strategy in the
Manning & Napier's largest buys in the quarter were mainly
oil and gas producers: EnCana Corporation (
), Range Resources Corp. (
), EOG Resources Inc. (
) and Apache Corp. (
EnCana Corporation (
EnCana Corp. is a 125-year-old natural gas, oil and natural gas
liquids company with resource plays in the U.S. and Canada.
Manning & Napier bought 7,825,980 shares of the company at an
average price of $20 during the second quarter.
EnCana Corporation has had modest growth over the last decade,
with declining revenue and net income since 2008. However, the
company is accelerating its development of oil and liquids rich
natural gas plays and will invest $600 million in the second half
of the year into its light oil and liquids rich natural gas
plays. In the second quarter, the company increased its 2012
guidance for total liquids production by seven percent to 30,000
barrels; in 2013 it expects liquids production in the range of
60,000 to 70,000 barrels per day.
Range Resources Corp. (
Range Resources Corp. is company that acquires, develops and
finances oil and gas properties in the U.S. Its goal is to
maintain one of the lowest cost structures in the industry while
constantly increasing production and reserves. Manning &
Napier purchased 2,223,550 shares of the company at an average
price of $60 in the second quarter. The stock is up more than 77%
over the last five years and has a P/E of 84.7, highlighting the
firm's strategy of paying slightly more for companies with
promise of growth.
The company has shown solid growth over the last decade, with
revenue per share increasing at an annual rate of 12.9% and
EBITDA at 7.3%. In the second quarter of 2012, the company
continued its growth. Revenues increased 32% year over year, and
net income increased 6% year over year. The company projects
production growth to be 35% for 2012, at the high end of its
EOG Resources Inc. (
EOG Resources is an oil and natural gas company with production
in the U.S., Canada, the Republic of Trinidad and Tobago, the UK,
China, Argentina, and elsewhere. Manning & Napier bought
1,293,138 shares of the company at an average price of $100 per
share in the second quarter.
EOG has also been growing rapidly over the last decade. It
achieved annual revenue per share growth of 19.8% on average
annually, and EBITDA growth per share of 14.9% on average
annually. In the last five years the company's stock ran up 44%,
and it has a P/E ratio of 20.95.
In the first quarter the company achieved a 49% increase in crude
oil and condensate production and 48% increase in total liquids
production over the previous year. Net income likewise increased
to $324 million compared to $134 the previous year.
Because of the stellar first-quarter results, the company raised
its total company liquids production growth production for 2012
to 30% from 33% and its total company production growth target to
7% from 5.5%.
Apache Corp. (
Apache Corp. is an independent natural gas, crude oil and natural
gas liquids company with assets in North America, Canada, Western
Australia, Egypt, Poland and China. Manning & Napier bout
1,036,210 shares of Apache at an average price of $88 in the
second quarter of 2012. Apache's stock increased only 8.5% in the
last five years and has a much lower P/E than the firm's other
oil and gas stocks at 8.22.
Apache has had a rather fast growth rate over the last 10 years.
Revenue per share increased at an average annual rate of 16.7%,
and EBITDA grew at an average annual rate of 15.3%. In the second
quarter, the company's production increased 7 percent year over
year, with U.S. liquids production increasing 11%, and global
liquids production increased 6% in the same period.
The company is expecting growth for the rest of the year due to
its worldwide drilling program and 312,000 new acres it purchased
in the Anadarko Basin through the acquisition of Cordillera
Energy Partners III in May. The company is also able to offset
lower U.S. natural gas prices, which fell 22 percent over the
prior-year period, by its global regions, which saw prices
increase 17 percent. International regions represent 38% of its
total gas volumes.
See the rest of Manning & Napier's buys and sells in their
. Also check out the
Top Growth Companies
High Yield stocks
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