Ceo change may be sign marsh is ready to rebound
Duperreault replaces Michael Cherkasky, a former regulator who spent three years helping to pull the firm out of a scandal involving accusations of bid-rigging, negotiating an $800 million settlement of the matter.
Sales, profit margins and share price lagged throughout Cherkasky’s tenure.
Shares of Marsh %26 McLennan (MMC) are up 2 percent this year following a 14 percent decline last year, which marked the fourth consecutive annual decline. Last month it increased its quarterly dividend to 20 cents, from 19 cents.
Long-term international demand for the firm’s risk management and retirement services looks strong, though price wars among insurers in recent years have hurt profits across the industry.
Marsh %26 McLennan’s future makeup is uncertain. For example, it sold its Putnam asset management unit last year for $3.9 billion. It has faced pressure from some shareholders to break the firm up into three parts, selling off its Mercer consulting and Kroll security businesses.
There has been speculation about possible sale of the company. Insurance broker Willis Group Holdings Ltd. reportedly sent a letter recently seeking to explore a possible merger. In addition, billionaire investor Nelson Peltz and his companies were recently cleared to buy Marsh %26 McLennan shares.
Amid this tumult, the consensus analyst recommendation on Marsh %26 McLennan is “hold,” according to Thomson Financial, consisting of two “strong buys,” two “buys,” 12 “holds,” two underperforms” and one “sell.”
Duperreault offers the potential to revitalize Marsh %26 McLennan as an independent public company as he works to promote its brands worldwide and improve broker and client relations. He joins Daniel Glaser, a well-known insurance leader with American International Group Inc., hired in December to run the brokerage operation.
Earnings are expected to increase 28 percent in 2008, with a five-year annualized growth rate of 9 percent, according to Thomson.
Q: Now what for my shares of Oakmark Select Fund? Performance has been terrible, no matter how you cut it. R.L., via the Internet
A: It took dramatic hits from portfolio holdings such as Washington Mutual Inc. and Pulte Homes Inc. Throughout its history the fund’s willingness to make big individual stock bets and to hold a focused portfolio of 15 to 20 stocks have been risk factors.
On the other hand, lead portfolio manager Bill Nygren has two decades of experience and employs a disciplined value approach, so the fund stands a good chance of revival once economic trends change.
The $4 billion Oakmark Select Fund “I” (OAKLX) is down 20 percent over the past 12 months and has an average three-year annualized decline of 0.1 percent. Both results rank in the bottom 1 percent of all large growth and value funds.
“I still recommend this fund because its experienced management is focused on the long term, it has low portfolio turnover and it buys companies as opposed to just trading stocks,” said Paul Herbert, analyst with Morningstar Inc. in Chicago. “Although we can’t say recovery will be quick, we do expect it and remain confident in the fund.”
Nygren, who has been with Oakmark Select since its 1996 inception and guided it to dynamic performance up until several years ago, also is the lead manager of Oakmark Fund. He looks for firms trading at significant discounts but has been willing to invest in non-traditional value areas such as biotechnology. A top holding can sometimes represent 15 percent of assets.
The fund watches taxes closely and actively manages the portfolio to minimize capital gains distributions when possible. Harris Associates, adviser to the Oakmark Funds, has frank shareholder communication and is willing to acknowledge mistakes. It also has an excellent corporate culture and a clean regulatory history.
Nearly one-third of the portfolio is consumer services, with media and financial services other significant concentrations. The top holdings are Washington Mutual, Yum Brands Inc., McDonald’s Corp., H%26R Block Inc., Discovery Holding Co., Time Warner Inc., IMS Health Inc., Intel Corp., Liberty Interactive and Viacom Inc.
This “no-load” (no sales charge) fund requires a $1,000 minimum initial investment and has an annual expense ratio of 0.99 percent.
Q: Is there anything I can do to speed up the transfer of my 401(k) money into the individual retirement account I’ve chosen? Am I totally at the mercy of my former company? H.T., via the Internet
A: This is a fairly common complaint.
Bring it to the attention of your former company if your transfer is taking more than 90 days to complete. It has the responsibility to make sure the system works, even if the time lag is mostly because of administrative paperwork and processes.
“Legally, there is no requirement to give you your money before you turn 65, but the fact is the only limits on moving the money these days are the administrative issues,” said David Wray, president of the Profit Sharing/401(k) Council of America.
“For most people, especially if their money is in easily valued investments such as mutual funds, it only takes about a month.”
The departing employee should fill out necessary paperwork requesting the rollover as soon as possible.
Andrew Leckey is a Tribune Media Services columnist. E-mail him at yourmoney@tribune.com.
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