By: Manisha Sethi May. 29, 2018

Murphy Pohlad Asset Management LLC’s SEC 13F filings on February 2, 2018, revealed a portfolio value of  $151.30 million for the last quarter of 2017. The firm’s top 10 holdings comprise 32% of its portfolio—its largest holding is Microsoft Corp. (MSFT) with 73,560 shares and a market value of $6.29 million. Murphy Pohlad Asset Management LLC is a privately held company in Eden Prairie, MN, that was founded in 2000 by John Murphy. It is an independent, fee-only investment advisor focussing on individual clients’ portfolios. Although the firm invests across sectors, its investments generally include equities such as individual common stocks or funds that own individual common stocks. Among these, they focus on owning high-quality companies managed by leaders they trust. While their research centers on cash flow and valuation, in case of equity investment funds, the research managers review performance and analyze the fund’s portfolio. They also manage the fixed income component of a portfolio by building bond ladders consisting of bonds that mature on a regular basis or by investing in fixed income funds. If intermediate and long-term interest rates do not offer the potential for favorable investment returns, they will either build shorter term bond ladders or invest the fixed income capital in short duration investments, including cash.

Raltin analyzed Murphy Pohlad Asset Management’s, new purchases since Q1 2014 and calculated their annual internal rate of return (IRR). The analysis shows a key difference between the IRR of the stocks and that of SPDR S&P 500 ETF trust (SPY): 52% of the new stock purchases or 23 new stocks outperformed the S&P 500 (details of Raltin’s methodology are available here). Of its 44 new purchases, 15 in Q1 2014-Q4 2017 outperformed the S&P 500 by more than 10%. However, only 10 new buys underperformed the index by the same percentage. The following table shows the number of new stock purchases relative to their performance with the S&P 500.

S&P outperformance categoryNumber of new stock purchasesTotal new purchases (% )
>20%818
10 to 20%716
0 to 10%818
-10 to 0%1125
-20 to -10%49
<-20%614
Total stocks44

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The registered institutional investor bought 4 new stocks in Q4 2017 from sectors like consumer discretionary, energy, and finance. Allison Transmission Holdings (ALSN) and Nordstrom (JWN) from the consumer discretionary sector composed 1.42% and 1% of the portfolio, respectively.

StocksNumber of sharesHolding value ($1,000)
Allison Transmission Holdings, Inc. (ALSN)49,8102,145
Nordstrom, Inc. (JWN)31,9501,513
Consol Energy (CEIX)5,909233
Legg Mason, Inc. (LM)4,900205

The following table shows the portfolio value of the investor for 5 quarters starting from Q1 2017 to Q1 2016 and the top holdings in each quarter that outperformed the S&P 500 IRR.

PeriodTotal portfolio value ($Mn)Top holdings (ticker, % IRR difference from S&P 500)
Q1 2017135.38Alphabet Inc. (GOOGL, 10.74)
Q4 2016138.15
Q3 2016134.66Taiwan Semiconductor Manufacturing Co. Ltd. (TSM, 6.63)
Q2 2016134.26
Q1 2016133EnCana Corp. (ECA, 77.58), [''] (NTRS, 18.15), Ingersoll-Rand plc (IR, 16.44)