Stan Majcher
Stan Majcher
Hotchkis & Wiley Mid-Cap Value

Pick: Allstate (ALL)

"People look for risks where the risks last happened," observes Stan Majcher, who likes to shop among disfavored stocks. That approach has propelled his $1.2 billion Hotchkis & Wiley Mid-Cap Value Fund (HWMIX) ahead of competitors over the past three years -- 20.9% per year to 14.4% -- according to Morningstar. Allstate, one of his top holdings, fits Majcher's philosophy. It's in a downtrodden industry and "viewed as broken," he says. "We think that is an erroneous conclusion." The common wisdom: Auto insurers are being squeezed by online sellers like Progressive and Geico, while the homeowners business is just generally difficult. In reality, Majcher argues, the auto policy declines are positive because they're pushing Allstate out of weak markets, and profitability in homeowners should improve as price increases stick. The stock trades at just eight times next year's estimated earnings and has a 2.7% dividend yield. "When you buy something at a very low multiple that's viewed unfavorably," Majcher says, "significant changes in sentiment can lead to high returns."

--A.F.


By Katie Benner, Ryan Derousseau, Amy Feldman, and Mina Kimes @FortuneMagazine - Last updated June 20 2012: 10:46 AM ET
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