Copyright 2008 Investor's Business Daily, Inc.All Rights Reserved Investor's Business Daily
November 5, 2008 Wednesday EAST EDITION
SECTION: A; Pg. A07
LENGTH: 497 words
HEADLINE: Top Fund Managers Find An Appetite For Some Insurers And Regional Banks
BYLINE: JULIE MAK
Managers of top-performing funds the past three months have eased their buying in their latest reporting periods.
Disappointing economic data and corporate earnings, bank failures and the financial rescue have been a major drag on the market. But keep in mind that when media and economist sentiments are mainly doom and gloom, often that's when the stock market hits bottom and is ready for a turnaround.
A look at what top managers have been buying during such times can be helpful.
The best-performing funds have been buying insurance firms ProAssurance and Life Partners Holdings. Also snatched up by the smart money: financials Signature Bank, SWS Group, United Bank, Home BancShares and Pinnacle Financial Partners.
Many retailers have been struggling as consumers and businesses cut back on spending. Weak retailers are filing for bankruptcy while their financially stronger rivals are benefiting from less competition and consolidation in the industry.
But some have held up well, including Spartan Stores, Tractor Supply, Ikon Office Solutions and PetMed Express.
IBD found 14 top-notch funds adding ProAssurance, investing an estimated $15 million in their latest reporting periods. The $4.7 billion Royce Premier Fund owned a stake in the firm.
The Birmingham, Ala., firm offers professional liability insurance to physicians, dentists and other health care providers.
The company reported third-quarter earnings of $1.31 per share, beating analysts' consensus of $1.18. But net profit was down 49% to $22.2 million from $43.1 million for the same period a year earlier.
The firm cited realized investment losses of $34.2 million in Fannie Mae and Freddie Mac, Lehman Bros., AIG and other securities in trading portfolios. The loss in the third quarter is less than 1% of the firm's $3.5 billion portfolio.
ProAssurance policyholders' renewal rate was 87% through the first nine months of 2008, but new business remains a challenge.
The stock broke out of a four-month consolidation on Sept. 16 and promptly spiked to a 52-week high of 71.16. Despite big down days in the market during the Halloween month, the stock has held up well. The stock is currently trading at about 53.
Sell Side
The country's leading funds have been unloading oil and energy stocks amid crude's recent slide. Funds have been getting rid of Whiting Petroleum, Exxon Mobil and Alpha Natural Resources.
Also on the sell list were a handful of retailers, including drugstore chain CVS Caremark, Wolverine World Wide and Kroger.
Nineteen top funds sold Whiting Petroleum, while five funds bought. That left 14 net-selling funds.
DFA U.S. Small Cap Value Fund sold shares in its latest reporting period.
After hitting a 52-week high of 112 on July 2, the oil and gas company sold off to a low of 31 on Oct. 10. Since then, it has bounced off the bottom to 53.
The Denver firm posted triple-digit earnings growth for the third quarter. But energy stocks have taken a beating, with demand for oil subsiding in recent months.
LOAD-DATE: November 4, 2008
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