=DJ Alliance Capital Added To Lucent, WorldCom Stakes In 1Q
datekdj.newsalert.com
05/16/2002
Dow Jones News Services
(Copyright © 2002 Dow Jones & Company, Inc.)
By John Shipman
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--A recent filing with the Securities and Exchange Commission shows that Alliance Capital Management Holdings L.P. (AC), the nation's largest publicly traded asset manager, wasn't shy about placing some sizable bets in the first quarter on a few beaten-down stocks.
Most conspicuous in the quarterly report is the increase in positions of names such as WorldCom Inc. (WCOM), Lucent Technologies Inc. (LU), Merrill Lynch & Co. (MER) and Guidant Corp. (GDT).
Alliance also added substantially to its stakes in PeopleSoft Inc. (PSFT), a provider of software to manage customers, accounting and employees, Wellpoint Health Networks Inc. (WLP), Carnival Corp. (CCL), and broadcasting giant Viacom Inc. (VIA).
Well-known for its growth style of investing, Alliance's considerable bets on the fortunes of WorldCom and Lucent most likely come from its Sanford C. Bernstein unit, which was acquired last year to add more of a value investing capability.
The exposure to the WorldCom stock by large-cap value funds tracked by Lipper Inc. stood at 0.3% at the end of last week, down from 0.4% at the end of February and 0.65% a year earlier.
But the decline was much milder than a drop in the share price, which has tumbled more than 80% since Feb. 28.
This, according to Don Cassidy, Lipper's senior analyst, indicates "there has been some bargain fishing lately" by value managers.
Already one of the top institutional holders of WorldCom, Alliance effectively doubled its stake in the troubled telecom, taking it to about 209 million shares in the first part of the year.
In light of recent events, the boost in its WorldCom holdings is likely to bring new attention to the firm's stock-picking prowess, but analysts were subdued over the news.
Because of its size - roughly $437 billion in assets under management as of April 30 - it's likely Alliance will be the largest holder of a lot of the stocks it owns, said Rachel Barnard, of investment researcher Morningstar Inc.
Relative to its overall assets, its stake in WorldCom is "just a drop in the bucket," she added.
Alliance's Lucent holdings rose about 88% to 42.7 million shares, and its interest in medical technology company Guidant rose 120% to about 3.3 million shares.
Both Merrill Lynch and Goldman Sachs Group Inc. (GS) appeared to be attractive buys, since Alliance increased its positions in those companies by about 95% and 136%, respectively.
A couple of the more significant portfolio additions included the PeopleSoft stake, which increased 140% to about 31.5 million shares, and Wellpoint Health which rose 152% to about 14.9 million shares.
The firm also displayed its confidence in the merger of Compaq Computer Corp. and Hewlett-Packard Co. (HPQ) by increasing its holdings in each by about 40%.
As for positions that were reduced in the quarter, Alliance seemed to focus in two areas - airlines and supermarkets.
Stakes in Continental Airlines Inc. (CAL), KLM Royal Dutch Airlines (KLM) and Delta Air Lines Inc. (DAL) were all reduced, with Delta taking the largest cut - about 90%.
Alliance cut its holdings in supermarket chain Kroger Co. (KR) by about 50%, while Safeway Inc. (SWY) was reduced by about 78%.
It also cut its holdings in telecom issues Qwest Communications International Inc. (Q) and Vodafone Group PLC (VOD) by 30% and 34%, respectively, but still remains the largest institutional shareholder in each issue.
-By John Shipman, Dow Jones Newswires; 201-938-5171; john.shipman@dowjones.com
-Yuka Hayashi contributed to this story.
(END) DOW JONES NEWS 05-16-02
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