Manning & Napier was founded in 1970 by Bill Manning and Bill Napier. The firm is majority employee-owned, which allows the company to have a direct stake in their investors’ success.
As of Dec. 31, Manning & Napier had more than 450 employees and manages $47.8 billion in assets for individuals, 401(k) plans, foundations, and endowments.
Over the past 15 years, Manning & Napier’s Equity Series has returned an average of 9.9% per year, compared to the S&P 500’s 5.2% per year.
During the fourth quarter, Manning & Napier purchased 38 new stocks. The following are the five largest new positions in terms of portfolio impact.
Tribune Media (TRCO, Financial)
The fund’s largest new purchase in terms of portfolio impact is 3,256,067 shares in Tribune Media at an average price of $63.82 per share.
Tribune Media is one of the country’s largest media organizations, and the only media company with newspapers, TV stations, and websites in the top three markets in the U.S. Its newspapers include the Los Angeles Times, Chicago Tribune, and Newsday.
Tribune Media formerly traded as an OTC stock with the symbol TRBAA. The former Tribune Co. spun off the newspaper division to Tribune Publishing Co (TPUB). The parent company was then renamed as Tribune Media in December.
The company’s stock has been down 2% since the beginning of the year.
Discovery Communications (DISCA, Financial)
Manning & Napier purchased 2,900,480 shares Discovery at an average price of $34.65 per share. The stock accounts for 0.44% of the portfolio. The fund had previously held shares in the second quarter of 2010, but sold out of the holding in the second quarter of 2012.
The stock has been down 26% over the past year; when compared to the Peter Lynch earnings line, the company is undervalued.
Discovery is a non-fiction media company that reaches 2.2 billion viewers worldwide. Its channels include Animal Planet and TLC.
The company has been consistently growing its diluted EPS, which recorded at $2.97 in FY 2013. Free cash flow per share has also grown steadily and was $3.24 in the same year.
The next largest new buy is 3,839,400 shares in Masco at an average price of $23.50 per share.
Masco manufactures home improvement and building products such as faucets, cabinets, architectural coatings and windows.
The company’s stock has been up 24% over the past year, but is still undervalued when looking at the Peter Lynch chart.
Masco’s operating margin took a hit in FY 2010 and 2011, when it was in the negatives. The margin has since improved, recording at 8.2% in FY 2013.
Other gurus who own Masco stock include Brian Rogers (Trades, Portfolio), Jean-Marie Eveillard (Trades, Portfolio), and Joel Greenblatt (Trades, Portfolio).
The fund also purchased 1,368,250 shares of T-Mobile at an average price of $27.63 per share. The company now comprises 0.16% of the portfolio.
The operating margin declined significantly from more than 16% in FY 2012 to about 4% the next year.
T-Mobile’s current ratio is 2.1, which indicates the company can easily cover its short-term obligations more than two times over.
The company’s P/E ratio jumped dramatically in FY 2013 and is currently at 214.6.
Financial Engines Inc (FNGN, Financial)
Manning & Napier purchased 519,710 shares in Financial Engines at an average price of $34.51 per share.
Financial Engines provides technology-enabled portfolio management services, investment advice, and retirement income services.
The company’s operating margin has been steadily expanding since FY 2009, and was 20.88% for the trailing 12 months.
Looking at the balance sheet, the current ratio is a very comfortable 8.8, and Financial Engines carries no long-term debt.
Other gurus who hold positions in Financial Engines include Ron Baron (Trades, Portfolio), Jim Simons (Trades, Portfolio), and Chuck Royce (Trades, Portfolio).
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