Perkins Large Cap Value Fund (JNPLX) looks for temporarily misunderstood companies. Intel Corporation (NASDAQ:INTC), Vodafone Group Plc (ADR) (NASDAQ:VOD), and Novartis AG (ADR) (NYSE:NVS) fit the bill.
Out of Favor
As the fund’s name suggests, it focuses on large cap value stocks. In general, management seeks out companies with strong balance sheets, solid recurring free cash flows, attractive valuations, and favorable risk/reward characteristics. All of that’s expected.
One area of specific focus, however, is companies that have “fallen out of favor with the market or that appear to be temporarily misunderstood by the investment community.” This is where the managers can add value. Some of the stocks in the portfolio at the end of February worth looking at include:
A Mobile Laggard
Intel Corporation (NASDAQ:INTC) was a laggard for the fund in 2012, however, management hasn’t given up on the holding. It notes the tech giant’s dominant position in the personal computer market as a near-term negative. Indeed, sales in this segment have slowed of late. Consumers have purchased more tablet computers instead of PCs because they can do most of what users want in a mobile format. Also, the fund highlights the corporate upgrade cycle as an additional drag.
However, two big positives underpin the company’s business. For one, Intel Corporation (NASDAQ:INTC)’s chips also help to power the backbone of the Internet. So, as the Internet continues integrating into everyday life, server sales have remained strong. Also, Intel Corporation (NASDAQ:INTC) is working on mobile chips, notably to support Google Inc (NASDAQ:GOOG)’s Android.
The company’s lack of exposure to mobile has been a sore spot for the market. While the concern is appropriate as the world moves toward mobile devices, Intel Corporation (NASDAQ:INTC) has plenty of firepower to break into the market. Its strong core businesses also provides it plenty of time. A decent yield and the company’s positive attributes “limit the downside risk at current levels.”
Hidden Assets
Vodafone Group Plc (ADR) (NASDAQ:VOD) is the forgotten partner in Verizon Wireless. That’s understandable since the company owns a minority 45% interest in the giant U.S. cell phone company. Still, it accounts for about half of Vodafone Group Plc (ADR) (NASDAQ:VOD)’s profits.
Vodafone Group Plc (ADR) (NASDAQ:VOD), however, is much more than just a Verizon Wireless proxy. The company also owns all of its operations in Spain, the United Kingdom, and Germany, and has controlling stakes in businesses in Italy (76.9% ownership), India (64.4%), and Africa (65%). In all, the company operates in more than 30 countries.
Like Intel Corporation (NASDAQ:INTC), Vodafone Group Plc (ADR) (NASDAQ:VOD) was a drag on the fund’s performance in 2012. The weak economy in Europe was largely behind the company’s disappointing showing. However, it has been buying back shares and returning value to shareholders via dividends. The distribution has been increased regularly for a decade (a one-year dip during the 2007 to 2009 recession is the lone standout).
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