By Matt Doiron
Louis Navellier of Navellier & Associates has been investing in growth stocks for over 30 years. The fund recently filed its 13F for the second quarter of 2012 with the SEC. We covered the top holdings in Navellier's portfolio, and now have decided to look a little further deeper in the filings and pick out five of the largest new positions in Navellier's portfolio. Navellier & Associates doesn't recommend or endorse any of the stocks or analysis in this article, and we have no relationship with the fund, but based on SEC filings these are our opinions of what they are thinking. Read on to see some of the fund's largest new positions or compare them to previous portfolio filings.
The largest new position in the fund's portfolio was American Tower (AMT), closing the quarter with just under 610,000 shares. The company develops antennas that provide communications services to wireless networks, radios, and other customers. Revenue has been growing at the company recently, but margins have been down and it reported a large decline in earnings in its most recent quarter compared to the same period in 2011. The company is also priced for growth with a forward P/E of 35. Large hedge fund D.E. Shaw had reported owning 2.1 million shares of American Tower at the end of the first quarter of the year.
Dollar General (DG) was the second largest new position for Navellier, as the fund bought about 860,000 shares of the discount retailer. Such low-priced stores have been hot with investors over the past couple years- Dollar General itself is up 62% over the last 52 weeks- as it has become conventional wisdom that these stocks stand to benefit from price-conscious consumers. Dollar General, true to form, has a rock-bottom beta of 0.1 and has been reporting strong revenue and earnings growth. Its trailing P/E ratio is 22 and its forward P/E stands at 16.
Hershey (HSY) is another low beta stock- its beta is 0. However, its pricing looks a bit steep to us. It trades at a trailing price-to-earnings ratio of 24 even though it is a mature low-growth company. Navellier had owned shares of Hershey in the past but had sold out by the end of the first quarter of this year; however, at the end of June, the fund reported ownership of about 530,000 shares. Billionaire Jim Simons's Renaissance Technologies reported 1.8 million shares of Hershey in its portfolio at the end of March.
Another new stock pick from Navellier was Bristol-Myers Squibb (BMY). The $53 billion market cap biopharmaceutical company is another low beta stock- 0.2 in this case. It has taken hits to its business recently, with its last quarterly report announcing revenue and earnings numbers that were each over 15% below the figures from the same period in the previous year. P/E ratios are in the mid-teens, though the company pays a 4.2% dividend yield at current prices. Navellier initiated a 1 million share position in Bristol-Myers Squibb in the second quarter.
Judging by Navellier's new stock picks, the fund appears to be buying into concerns about macro weakness in the U.S. The statistical relationships of these stocks to the broader market are remarkably low, indicating that one criterion the fund is using to pick new positions is a stock's ability to weather a bear market. This is particularly interesting in light of Navellier historically being a growth-focused fund- perhaps it not only has concerns about the U.S. economy in the short term, but believes that companies such as Dollar General and Dollar Tree (DLTR), where the fund has also been a shareholder, are long-term growth stocks.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.