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Founded in 1985, Munder Capital Management is an employee-owned investment advisory and hedge fund firm managing $13 billion in assets. The firm manages the Munder series of mutual funds in addition to other funds, and caters to high-net-worth individuals, institutions, pension and profit-sharing plans, charitable organizations, municipal government entities and corporations.

Investment Strategy: Munder Capital Management offers various mandates, managing domestic and international portfolios. The firm generally identifies favorable investments by analyzing each company’s fundamental financial strength, industry position, management team, investor sentiment and valuation. The large-cap value strategy looks for companies that are trading at a significant discount and exhibit a catalyst that can potentially cause favorable revaluation.

Target investments are companies with relatively low valuation as evidenced by P/E, P/CF and other value measures. Additionally, businesses with strong management, profitability, industry leadership, as well as improving earnings estimates and stock price trends are typically sought. Investments are considered for a sale when valuation becomes unattractive, operating profitability deteriorates, growth expectations significantly reduce and better opportunity arises.

The core growth strategy focuses on high quality mid- and large-cap companies that display above-average earnings growth, financial strength, reasonable valuations and positive investor sentiment. The international core strategy combines quantitative analysis with fundamental research to target candidates with improving business momentum, positive earnings surprises and attractive valuations. A sell decision is typically triggered when there is substantial deterioration in earnings and unattractive valuation relative to other stocks. Munder Capital Management also offers sector-focused portfolios, including energy, healthcare and technology.

The following is a list of top stocks (by market value) that Munder Capital Management bought in the last quarter, as released in its most recent 13F filing with the SEC.

Stock

Shares Held,
03/31/11

Shares Held,
06/30/2011

Peabody Energy Corp. (BTU)

192,523
1,927,668

Hansen Natural Corporation (HANS)

0
1,231,520

Ecolab Inc. (ECL)

0
1,712,012

Stanley Black & Decker, Inc. (SWK)

59,135
1,295,781

Health Management Associates Inc. (HMA)

4,132,221
12,047,026

Oil States International Inc. (OIS)

15,300
1,036,956

Healthsouth Corp. (HLS)

492,697
3,546,034

My favorite stock among the above is Ecolab Inc. Ecolab’s shares are on a downward trend since it announced acquisition of Nalco Holdings (NLC) last month. Investors are concerned that Ecolab’s proposed acquisition of Nalco will diminish Ecolab’s earnings consistency and the combined company would be more cyclical. Further, some investors believe that the merger may not have any positive impact on growth rate, and the combined entity will have growth rate similar to that of Ecolab.

I think investors’ concerns are misplaced. Ecolab will contribute 63% of proforma EBITDA of the combined entity, hence Ecolab’s resiliency will be largely intact. Further Nalco’s operating income trends are more similar to Ecolab than perceived (Nalco’s EBITDA fell just 5% in 2009). Also, demand for Nalco's products products and services are stronger than for Ecolab's. However, given its high leverage, Nalco was undercapitalized and growth was hampered due to the lack of funds for acquiring complementary technologies and for capacity expansion where needed. I think ECL can manage NLC better and improve NLC’s growth rate.

I think investor concerns will diminish if ECL posts a few quarters of consistent earnings following the closing of acquisition (expected Q4 2011). There is a good upside if ECL shares are able to go back to historical valuation levels (forward P/E of 24x).

Peabody Energy Corporation is a coal company. The company owns majority interests in 28 coal mining operations in the United States and Australia. In addition to mining operations, it markets, brokers and trades coal. It operates in four segments: its three mining segments and a Trading and Brokerage segment. Peabody's EPS forecast for the current year is $4.44 and next year is $5.86. According to consensus estimates, its top line is expected to grow 19.00% in the current year and 12.10% next year.

Hansen Natural Corporation is a holding company. Hansen develops, markets, sells and distributes alternative beverage. The Company’s category beverages brand names include Monster Energy, Java Monster, Monster Energy Extra Strength Nitrous Technology, Monster Rehab, Peace Tea, Hansen’s, Hansen’s Natural Sodas, Junior Juice, Blue Sky, X-Presso Monster, Vidration, Worx Energy, Admiral, Lost Energy, Hubert’s, Rumba, Samba and Tango. It has two segments: Direct Store Delivery, whose principal products consists of primarily energy drinks, and Warehouse, whose principal products consists of juice based and soda beverages. Hansen's EPS forecast for the current year is $3.01 and next year is $3.56. According to consensus estimates, its top line is expected to grow 24.90% in the current year and 15.10% next year.

Stanley Black & Decker, Inc. operates in three segments: Construction & Do-It-Yourself, Security, and Industrial. Stanley's EPS forecast for the current year is $5.29 and next year is $6.11. According to consensus estimates, its top line is expected to grow 21.30% in the current year and 8.70% next year.

Health Management Associates, Inc., through its subsidiaries, operates general acute care hospitals in non-urban communities. Health Management Associates' EPS forecast for the current year is $0.77 and next year is $0.87. According to consensus estimates, its top line is expected to grow 11.40% in the current year and 6.20% next year.

Oil States International, Inc. is a provider of specialty products and services to natural resources companies worldwide. It operates in four principal business segments: accommodations, offshore products, well site services and tubular services. Oil States' EPS forecast for the current year is $5.51 and next year is $6.79. According to consensus estimates, its top line is expected to grow 40.00% in the current year and 15.10% next year.

HealthSouth Corporation is a provider of inpatient rehabilitative healthcare services. HealthSouth's EPS forecast for the current year is $1.24 and next year is $1.41. According to consensus estimates, its top line is expected to grow 2.60% in the current year and 3.40% next year.

Source: Munder Capital's Top Fund Buys