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Firm goes on Qwest buying spree
By Andy Vuong, Staff Writer
Denver Post
Friday, June 8, 2007

A global investment management firm known for its quantitative models has quietly snatched up tens of millions of Qwest shares over the past two years.

Acadian Asset Management, which uses "sophisticated analytical models" to make its stock picks, held 65.6 million Qwest shares at the end of the first quarter, up from 7.6 million shares during the same period in 2006, according to regulatory filings.

The Boston-based company added more than 40 million Qwest shares during the fourth quarter alone.  It is the seventh-largest Qwest shareholder, with a 3.5 percent stake.

Acadian's increased holdings in Qwest are a sign that the Denver-based telecommunications company's financials fit the metrics of Acadian's computer model, said Stifel Nicolaus analyst Chris King.

"They tend to have a little less flexibility with respect to their investments and their decision-making," King said.  "They've got a quant model, and they tend to follow it pretty closely."

Acadian factors in valuation, earnings potential, financial quality and price movements to assess how a stock will perform relative to its peer group, according to its website.

The company's database covers more than 25,000 securities in more than 60 markets worldwide.

Denver-based Qwest, which provides local phone service in 14 states and operates a nationwide fiber-optic communications network, has returned to sustainable profitability over the past year after flirting with bankruptcy five years ago.  The company's debt has been reduced to $14.9 billion from about $26 billion in 2002, and it is on a run of five straight quarterly profits.

Officials for Acadian, which has $69 billion under management, didn't return calls seeking comment.

Qwest spokeswoman Diane Reberger said the company monitors its stock activity, but wouldn't comment directly about a specific investor.

Acadian holds fairly minor stakes in the other Baby Bells, with 1.1 million shares of AT&T and 87,470 shares of Verizon Communications.

Despite a steep drop Thursday, Qwest stock price is up 16 percent this year.  Qwest shares fell 38 cents, or 3.74 percent, to close Thursday at $9.77.  Other telecom stocks also took a hit amid rising interest rates.

Firm seeks market inefficiencies

London-based Old Mutual is the parent company of Acadian, a 20-year-old firm whose clients include public and corporate pension plans, governments and private individuals.

Acadian's investment strategy states that "stocks are often mispriced relative to fair value, and that these pricing inefficiencies can be exploited by an active, disciplined valuation process."

The year-to-date performance of Acadian's Emerging Markets Fund ranks 29th out of 248 funds with a return of 16.95 percent, according to Denver-based research firm Lipper.

The fund has $856 million in assets under management, the largest of any Acadian fund monitored by Lipper.

Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.

http://origin.denverpost.com/business/ci_6087686