Skip to Content
Premium Article

Power and Money Help Warburg Pincus Value

Energy and financials are keys to fund's strong finish in 2000.

Mentioned: , ,

Warburg Pincus Value (RBEGX) finished the millennium with a nice kick. After a subpar start in the first half of 2000, this fund surged ahead to close the year with a top-half finish in the large-value category. The fund’s large energy stake, which peaked near 22% of assets, helped as oil and gas prices stayed well above their average prices for 1999. Services companies such as R&B Falcon (FLC) and drillers like Nabors Industries (NBR) and Pride International (PDE) contributed greatly to returns. The fund’s financials stake, especially Fannie Mae (FNM) and Wells Fargo (WFC), performed well, too.

Managers Scott Lewis and Bob Rescoe adopted a relatively defensive stance toward the end of 2000. For example, though they increased the fund’s overall financials exposure, with the exception of a few banks like Wells Fargo, they shifted out of that area and into less credit-sensitive financial-services companies such as insurers MBIA (MBI) and MGIC Investment (MTG). Starting in the third quarter, the pair also trimmed their energy stake due to worries about a global demand slowdown and OPEC production increases leading to lower prices. The pair cut back their stake in major-oil companies, selling Total Fina Elf (TOT) and trimming Exxon Mobil (XOM). But they did, however, keep stocks with natural-gas exposure in North America and a good slug of oil-services companies, which they think still will benefit from the search for more oil and gas.

This article is exclusive to Morningstar Premium members.

Start a 14-Day Free Trial

Michael Gaul does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.