Southeastern Asset Management is a long-only value equity firm founded by Mason Hawkins in 1975. The investment firm focuses its strategy on in-depth research and a thorough decision-making process. The firm’s analysts quantitatively and qualitatively analyze companies, as they search for strong businesses with deeply discounted prices. Southeastern Asset Management has built a relatively concentrated public equity portfolio with a market value of $14.95 billion as of June 30. By rigorously analyzing the firm’s latest 13F filing with the SEC, we pinpointed its most valuable finance holdings as of June 30. Therefore, in the following article we’ll be discussing Mason Hawkins’ top finance stocks, which include these companies: Loews Corporation (NYSE:L), Aon plc (NYSE:AON), and Everest Re Group Ltd. (NYSE:RE).
We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 60.4 percentage points (118% return vs. S&P 500’s 57.6% gain) over the last 35 months (see the details here).
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To begin with, Loews Corporation (NYSE:L) was the most valuable finance-related holding of Southeastern Asset Management at the end of the second quarter. The investment firm sold nearly 4.13 million shares of the company during the quarter, trimming its stake to 29.52 million shares valued at $1.14 billion. Loews has underperformed the industry it is operating in, losing nearly 12% year-to-date, whereas the finance sector lost 4.7% over the same period. The commercial property and casualty insurance company recently posted its financial results for the second quarter, reporting a 44% decline in its quarterly profit. Specifically, Loews posted earnings per share (EPS) of $0.46 on revenue of $3.59 billion for the quarter, compared to $0.70 per share on revenue of $3.59 billion reported a year ago. The company’s lower-than-expected results, which have put downward pressure on the stock, were mainly affected by the weak sales at its largest subsidiaries: insurance giant CNA Financial and drilling company Diamond Offshore. From the massive pool of hedge funds that we observe, Boykin Curry’s Eagle Capital Management is among the largest equity holders of Loews Corporation (NYSE:L), holding a 1.96 million-share stake.
