Chuck Akre just launched his own fund, Akre Focus, after leaving FBR Focus, where he returned 12.6% annually from 1996 through 2009.
Akre, who keeps a third of his portfolio in financial services stocks, has a creative idea: convertible preferred shares of the Hartford Financial Services Group. These must be converted into common stock in 2013. Based on a price of $25, they offer a 7.25% yield, and Akre thinks a sizable gain is likely on the conversion. Over three years, he estimates, investors will reap annual returns of 18%.
The Hartford was hit hard during the financial crisis, but Akre thinks it's in good shape after recapitalizing. "It's an interesting, low-risk, decent turnaround play in a market with a lot of uncertainty," he says.
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