* MFS Utility Fund manager looks for beaten-down stocks
* Big bets made amid credit crunch paid off this year
By Aaron Pressman
BOSTON, Dec 23 Maura Shaughnessy, manager of
the MFS Utilities fund, has bicycled across New Zealand and
Italy and in the Grand Canyon, not to mention completing an
annual 192-mile charity ride in Massachusetts 16 times.
She's just as relentless in her investing. The $2.7 billion
MFS fund, which she has led since it opened in 1992, is the top
performer in its category over the past year, three years and
five years, according to Lipper data.
In 2009, the fund is up 32 percent, compared with 15
percent for the average utility fund.
Shaughnessy's tenure has been defined by steely contrarian
bets amid market meltdowns. In 2002, the collapse of Enron and
other power companies crushed bond and stock prices across the
sector. Shaughnessy scooped up shares of bankrupt California
utility PG&E (PCG.N) and bonds of near-bankrupt AES Corp
(AES.N). Both companies recovered and the securities zoomed.
Later, prosecutors investigating the accounting scandals
turned to Shaughnessy as a possible expert witness. She helped
explain balance sheets of Enron, Charter Communications and
others, though she never ended up on the witness stand.
The 2008 credit crunch provided a second "once in a
lifetime" opportunity. After banks starting slashing dividends,
investors panicked and sold many utilities for fear they might
be forced to cut dividends, too.
Shaughnessy scooped up battered high yielders like pipeline
operator Spectra Energy Corp SE.N and gas utility NiSource
Inc (NI.N). "I remember thinking this is just crazy," she said.
While paying yields of 10 percent and up, many of the stocks
have also doubled in price.
KICK IN THE SHINS
Utility executives across the industry have learned to
respect Shaughnessy's experience and her forthrightness. David
Crane, chief executive of NRG Energy Inc (NRG.N), remembers his
first experience with Shaughnessy after he took the top job at
the New Jersey-based power producer in December 2003 as it
emerged from Chapter 11 bankruptcy protection.
Four months into the job, Crane and his staff were doing
due diligence on some power plants that were for sale.
Shaughnessy heard rumors and called to tell Crane the company
had to rebuild trust with investors before any dealmaking.
"If this was true, she said she'd be dismembering a
significant portion of my anatomy," Crane recalled. "With
Maura, there is no b.s. and no spin." (A member of NRG's
investor relations department recalls Shaughnessy's quote
differently -- she'd "kick David in the shins.")
In a December interview at her Boston office, Shaughnessy,
just back from a trip visiting a dozen companies in Brazil, was
as focused as ever. She argues that an investment she has made
in a tiny Brazilian water utility, Copasa (CSMG3.SA), is less
risky than owning many of the largest American power producers
that run mainly coal-burning plants.
"They're just dead," she says, mincing few words. "They're
not doing anything. I'd rather buy little water companies in
MFS lists the fund's benchmark as the Standard & Poor's 500
Utilities Index .GSPU, but it is almost irrelevant to
Shaughnessy. She says she doesn't know the sector and country
weightings of her fund on any particular day after assembling
her portfolio by selecting individual stocks.
As of its most recent full portfolio disclosure on Oct. 31,
the fund held no shares of Exelon Corp (EXC.N) or Southern Co
(SO.N), the two largest weightings in the utilities index.
After graduating from Maine's Colby College, where she
majored in math and economics, Shaughnessy got her start as an
analyst at the Federal Reserve in Washington. The job of trying
to forecast interest rates and GDP wasn't appealing, and she
headed off to Dartmouth's Tuck School of Business for an MBA.
At the Fed, "the only thing I learned was that no one can
do macroeconomic forecasting with any consistency," she says.
Now she tries to make investment decisions that don't rely on
such broad prognostications.
Shaughnessy next got a job as a stock analyst at the
Harvard University endowment. Robert Atchinson, who headed the
equities area at the time, remembers Shaughnessy's skill as
well as her intensity.
Back in the late 1980s, everyone at Harvard shared a single
Quotron terminal to check stock prices. If Shaughnessy was at
the machine and her stocks weren't doing well, she'd let her
frustration show, Atchinson recalled.
"If it wasn't going well, we'd all just kind of disappear
back into our offices," he said.
The grind eventually wore her down and she quit to go on a
three-month backpacking trip in Nepal. If she had stayed with
Atchinson at Harvard, Shaughnessy says she might now be with
the $8 billion Boston hedge fund, Adage Capital, that he and
other members of his team opened in 2001. "That may be the most
expensive trip I ever took," she quips.
Atchinson, who says Shaughnessy "has a great nose for
stocks," says he'd have her back any time.
Lately, Shaughnessy has been buying shares of gas
processors like Questar Corp STR.N that benefit from low
natural gas prices. Almost everyone on Wall Street also
predicts low gas prices.
"It's such a consensus call it nauseates me," Shaughnessy
(Reporting by Aaron Pressman; editing by Ros Krasny and John