Seeking Alpha
Newsletter provider, fund holdings, insider ownership
Profile| Send Message|
( followers)  

GW Capital was founded in 1989. The 100% employee-owned company manages several different funds, but follows a similar strategy for each – focus on identifying under-followed, under-owned and under-valued securities, while also exploiting market inefficiencies as they arise. Guy Watanabe founded the company. Today he leads GW Capital’s Investment Committee. Watanabe’s top 16 positions have done very well since the end of the third quarter. Of these top positions, only five underperformed the SPY’s 11.58% performance, while the top five topped 30%, going as high as 43.97%. All in all, Watanabe’s top 16 positions have returned 20.81% since the end of September.

Name

Ticker

Position Value (x1,000)

Return Since Sept 30

Oneok Inc

OKE

$57,785

17.50%

Brigham Exploration

BEXP

$47,484

43.97%

CNO Financial Group

CNO

$43,652

16.27%

Omega Healthcare

OHI

$39,771

15.99%

Brookdale Senior Living

BKD

$35,914

30.86%

Ocwen Financial

OCN

$30,152

10.37%

Esterline Technologies

ESL

$29,436

9.59%

A.O. Smith Corporation

AOS

$27,551

4.54%

Darling International

DAR

$25,842

13.34%

Owens Illinois

OI

$25,500

35.78%

Albany International Corp

AIN

$23,614

28.55%

Crown Holdings Inc

CCK

$22,639

9.31%

IberiaBank Corp

IBKC

$21,833

10.24%

Barnes Group Inc

B

$21,076

21.56%

General Cable Corp

BGC

$20,739

15.37%

El Paso Corp

EP

$20,084

42.33%

Watanabe’s top position was in Oneok, Inc. (NYSE:OKE). OKE is in a natural gas energy and pipeline business. It has returned 17.5% since the end of September. The company has a forward P/E of 24.25. Its year-over-year growth estimate is 13.01% for next year. OKE recently announced third quarter earnings of 57 cents per diluted share, compared to 51 cents per diluted share for the same period last year. Its third quarter net income was $60.3 million, versus $55.3 million for the same period in 2010.

Brigham Exploration (BEXP) is Watanabe’s second-largest position. It is also the most profitable of his top 15 positions, having returned 43.97% since the end of the third quarter. BEXP has a forward P/E ratio of 2.57 and is expected to grow 35% over the next five years, compared to industry expectations of 18.6%. It won’t report its third-quarter earnings until November 7. Michael Karsch’s Karsch Capital Management is a fan of BEXP. The fund had more than $62 million invested in the company at the end of the second quarter.

CNO Financial Group (NYSE:CNO), Watanabe’s third-largest position, returned 16.27% since the end of the third quarter. The company, which is a holding company for health and life insurance companies in the US, has a low forward P/E of 8.57. While its five-year earnings estimate was not available, the company does have a year-over-year earnings growth estimate of 10.35% for next year. The company recently reported its third-quarter earnings. It had third-quarter net income of $196 million, representing almost a fourfold increase from the same quarter last year.

Watanabe’s fourth-largest position is Omega Healthcare (NYSE:OHI). The company returned 15.99% since the end of September. It has a forward P/E of 9.71 and is expected to grow 5.3% over the next five years, underperforming its industry, which is expected to grow 10.1% over the same period. The company’s operating revenues increased to $72.8 million in the third quarter, up from $69.7 million the same quarter last year. David Dreman’s Dreman Value Management is a fan. The fund had $37.6 million in the company at the end of June after increasing its stake by 3% in the second quarter.

Brookdale Senior Living (NYSE:BKD) is Watanabe’s fifth-largest position and of his most profitable, returning 30.86% since the end of the third quarter. P/E ratio was not available for the company. The company recently traded at $16.41 a share. Analysts expect the stock to reach $21.20 within the next year. It is expected to grow 12.5% over the next five years compared to estimates of 12.4% for its industry. BKD announced its third quarter earnings recently. Its total third quarter revenue was $615.7 million, up $39.9 million compared to the same quarter in 2010. Michael Novogratz’s Fortress Investment Group is very bullish about BKD. The company has more than $426.7 million invested, a position representing 21.34% of the fund’s total portfolio value.

Source: 15 Under-Followed, Undervalued Picks From GW Capital