Billion Dollar Manager David Dreman’s Biggest Holdings
Meena is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
David Dreman has been the head of Dreman Value Management since 1977, opening the doors to his own investment firm after working as director of research and senior investment officer for a number of years previously. He is also a noted writer, contributing to Forbes Magazine and various behavioral finance publications. He currently manages $4 billion in assets, down from $22 billion in 2007, where he was faced with loss of value and redemptions in the following years. We were able to take a look at his latest 13F filings to see how his current investors are faring with his largest positions.
Dreman’s largest holding is in Foster Wheeler (NASDAQ: FWLT), an international engineering, construction, and project management contractor and power equipment supplier. FWLT had a rocky year in 2012, starting the year with a price near $23, only to fall to lows near $16 during the summer, eventually recovering to slightly above where it started the year. As such, the stock only returned 6.6% on the year, and quarterly revenue growth was poor versus a year prior. In spite of that, the company is trading at a promising price relative to future earnings, and growth is expected in 2013, as Wall Street analysts have weighed in to give a potential one year price target near $30. We would wait for a more solid performer to hit our radars before diving in (see which fund manager has over $200 million invested in FWLT).
Coeur d’Alene Mines (NYSE: CDE) is Dreman’s second-largest holding, occupying just over 1% of his total assets under management (as such, one can infer that Dreman prefers diversification versus loading into positions). The precious metals miner has assets located globally, primarily in the U.S., South and Central America, and Australia. CDE was in line with the poor performance of commodities last year, chalking up a loss on the year; they also missed Q3 2012 earnings estimates by 43%. A number of hedge fund managers shaved their holdings in their last 13F filings, and you can see the degree to which they unwound their trades here.
The fund’s next holding is in the bank holding company Associated Banc-Corp (NASDAQ: ASBC). They primarily serve individual and corporate customers and contribute to Dreman’s heavy financial holdings. The company recently reported earnings on Jan. 17, meeting consensus estimates, but they have had to suffer through two downgrades this month alone, from buy to hold. ASBC does provide investors with a relatively attractive dividend yield of 2.3%, and with positive growth in earnings and revenues, an investor could certainly do worse (see which billionaire hedge fund manager has over $25 million devoted to ASBC).
Dreman’s fourth-largest position can be found in Charles River Laboratories International (NYSE: CRL), a biotechnology firm that promotes the drug development and testing process. The firm's claim to fame is “in vivo” (oftentimes human) testing, and they made a strong push into China in 2012 with their acquisition of Vital River, completed on the 8th of this month. CRL consistently beat earnings in every quarter of 2012 and has seen high praise from research houses, although current estimates hint at a possible overheating and small retracement in stock price from these levels.
Hanesbrands (NYSE: HBI) rounds out Dreman’s list, and the apparel manufacturer provides further diversity in his top five holdings. With notable brands such as Hanes, Champion, and Wonderbra, HBI is a best-of-breed seller in the important category of clothing items that need constant replenishment, so consumers continue to provide sales support even in weaker economic times. This strength is highlighted in their 2012 performance; the stock gained a whopping 56% in share price. We join other analysts in being bullish going into 2013, as impressive valuation metrics across the board support a higher share price by the end of the year.
This article is written by Eric Winter and edited by Meena Krishnamsetty. They don't own shares in any of the stocks mentioned in this article. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!