Here's What This $69 Billion Manager Has Been Buying

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Feb 9, 2014 at 10:00PM

Every quarter, many money managers have to disclose what they've bought and sold, via "13F" filings. Their latest moves can shine a bright light on smart stock picks.

Today let's look at Barrow, Hanley, Mewhinney & Strauss, founded in 1979 and one of the biggest value-focused institutional investment companies around. According to the folks at GuruFocus.com, over the 15 years ending in 2013, Barrow, Hanley racked up a cumulative gain of 194%, compared with just 98% for the S&P 500. Its massive large-cap value equity fund has outperformed the S&P 500 over the past five and 10 years.

The company's reportable stock portfolio totaled $69.0 billion in value as of Dec. 31.

Interesting developments
So what does Barrow, Hanley's latest quarterly 13F filing tell us? Here are a few interesting details.

The biggest new holdings are Joy Global, and Genworth Financial (NYSE:GNW). Other new holdings of interest include Linn Co (NASDAQ:LNCO), an oil-and-gas company with a dividend yield of 9.1%. It largely exists to own units of the master limited partnership Linn Energy and convert distributions into dividends. Linn and Linn Co recently acquired Berry Petroleum, and Linn is also building its position in the promising Permian Basin. Bulls like Linn's cash generation and growth prospects. Bears have worried about operational mishaps and an SEC inquiry, but the inquiry has been fruitless. The stock has recently been upgraded by analysts at Robert W. Baird and Howard Weill.

Genworth Financial has been on fire lately, turning itself around and topping analyst estimates with its fourth-quarter results. Genworth has been cutting costs, has raised its rates, has improved its long-term care offerings, and is poised to benefit from a rebound in housing, as it insures mortgages. Bears worry, though, that tightening lending standards may result in less need for its insurance. Genworth stock looks appealing with its forward P/E ratio recently near 8. Some are waiting for its dividend to be reinstated.

Among holdings in which Barrow, Hanley, Mewhinney & Strauss increased its stake were Intel (NASDAQ:INTC) and First Niagara Financial Group (NASDAQ:FNFG). Intel sports a hefty dividend yield of 3.7%, and it hasn't upped that payout in nearly two years, as it invests more in growth with its cash flow. The company has been in a bit of a slump, posting underwhelming earnings and trying to boost its presence in the smartphones and tablets. Many see value in Intel, with its dominant market position, growing revenue and earnings, and significant payout. Investors need to take a long-term view, though.

First Niagara Financial Group also offers a tasty yield of 3.7%. Bulls have liked its strong asset-base growth, while bears haven't liked seeing it increase its share count to do so. The company recently posted fourth-quarter results that featured solid organic loan growth, but management's near-term forecast disappointed investors, sending shares down to what some see as a bargain level. First Niagara Financial has been managing its credit risk well and should continue its turnaround.

Barrow, Hanley, Mewhinney & Strauss reduced its stake in lots of companies, including General Electric (NYSE:GE). GE has been transforming itself, spinning off its retail finance business, for example, and becoming much more of an energy company, with oil and gas now its fourth-largest revenue generator. Its fourth quarter featured revenue up 3% over the year-ago quarter, earnings per share up 20%, and its order backlog growing by 8% to a record $244 billion. Many see GE stock as a solid value, and insiders such as CEO Jeff Immelt have been buying lately. The stock yields an attractive 3.6%.

Finally, Barrow, Hanley's biggest closed positions included Baxter International and ONEOK.

We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing, and 13F forms can be great places to find intriguing candidates for our portfolios.

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Selena Maranjianwhom you can follow on Twitter, owns shares of General Electric and Intel. The Motley Fool recommends Baxter International, Intel, and ONEOK and owns shares of General Electric and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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