Michael Price founded MFP Investors in 1998, two years after selling Heine Securities for $670 million. We have gone through the fund’s 13F filing from the end of September; though that’s obviously some time ago, our analysis of MFP’s filings indicates that most positions don’t change much over the course of a quarter and so many of them are probably still active. In any case we can screen for value stocks that the fund reported owning and take a closer look to see if these companies should be researched further. Here are five of Price’s top ten stock picks from MFP’s most recent 13F filing (see more stocks the fund owned); each of these five stocks had both trailing and forward P/E multiples of 15 or lower.
MFP increased its stake in Intel Corporation (NASDAQ:INTC) by 23% to a total of 1.6 million shares, making the chipmaker the second largest holding by market value disclosed in the 13F. The industry has been doing poorly recently, and while Intel has not been hit has hard as peer AMD the company did report a 14% decline in earnings for the third quarter of 2012 compared to the same period in 2011. Renaissance Technologies, founded by billionaire Jim Simons, owned 19 million shares at the end of September (check out Renaissance’s stock picks). Intel trades at 11 times consensus 2013 earnings, and may be worth further consideration.
The fund kept its position in Alleghany Corporation (NYSE:Y) the same at about 90,000 shares. Alleghany is a $6 billion market cap insurance company; the forward P/E here is 15, and the stock also trades at a slight discount to book value with a P/B ratio of 0.9. Our database of 13F filings shows that Marty Whitman’s Third Avenue reported a position of about 290,000 shares. In addition, the stock has a beta of 0.6 and so Alleghany isn’t very sensitive to broader market conditions. We might compare it to its peers, as we might be able to find cheaper stocks in the same industry.
Another insurance company, Symetra Financial Corporation (NYSE:SYA), was one of the largest holdings in MFP’s portfolio (though Symetra is a life insurer as opposed to property and casualty insurance as with Alleghany). The stock is up 48% in the last year, and Symetra reported a double-digit earnings growth rate in its most recent quarterly report compared to the same period in the previous year. Highfields Capital Management, which is managed by Jonathon Jacobson, had 4.2 million shares in its portfolio (find Highfields’ favorite stocks).The forward P/E of 9 and P/B ratio of 0.5 suggest that it could be a good value.