Manning & Napier is a more than 40-year-old management firm with about $44.7 billion in assets under management and 5.7% average annual return since inception. The firm bought 49 new stocks for their portfolio of 361 stocks in the second quarter. A key to their second quarter view of the economy is stated in their second quarter letter:

During challenging market environments in the past, our disciplined investment process led us to position clients in areas that often raised the eyebrows of outsiders. Sometimes we looked foolish at first, but eventually our strategy and conviction paid off. Applying this same process today, in a slow growth environment, we believe rational investors should be willing to ascribe a higher value to businesses with strong growth prospects. In our view, positioning clients in companies that can achieve organic growth will protect clients from the greatest risk in today’s environment—reinvestment rate risk—and as such will prove to be the winning strategy in the long-run.

Manning & Napier’s largest buys in the quarter were mainly oil and gas producers: EnCana Corporation (ECA), Range Resources Corp. (RRC), EOG Resources Inc. (EOG) and Apache Corp. (APA).

EnCana Corporation (ECA)

EnCana Corp. is a 125-year-old natural gas, oil and natural gas liquids company with resource plays in the U.S. and Canada. Manning & Napier bought 7,825,980 shares of the company at an average price of $20 during the second quarter.

EnCana Corporation has had modest growth over the last decade, with declining revenue and net income since 2008. However, the company is accelerating its development of oil and liquids rich natural gas plays and will invest $600 million in the second half of the year into its light oil and liquids rich natural gas plays. In the second quarter, the company increased its 2012 guidance for total liquids production by seven percent to 30,000 barrels; in 2013 it expects liquids production in the range of 60,000 to 70,000 barrels per day.

Range Resources Corp. (RRC)

Range Resources Corp. is company that acquires, develops and finances oil and gas properties in the U.S. Its goal is to maintain one of the lowest cost structures in the industry while constantly increasing production and reserves. Manning & Napier purchased 2,223,550 shares of the company at an average price of $60 in the second quarter. The stock is up more than 77% over the last five years and has a P/E of 84.7, highlighting the firm’s strategy of paying slightly more for companies with promise of growth.

The company has shown solid growth over the last decade, with revenue per share increasing at an annual rate of 12.9% and EBITDA at 7.3%. In the second quarter of 2012, the company continued its growth. Revenues increased 32% year over year, and net income increased 6% year over year. The company projects production growth to be 35% for 2012, at the high end of its full-year guidance.

EOG Resources Inc. (EOG)

EOG Resources is an oil and natural gas company with production in the U.S., Canada, the Republic of Trinidad and Tobago, the UK, China, Argentina, and elsewhere. Manning & Napier bought 1,293,138 shares of the company at an average price of $100 per share in the second quarter.

EOG has also been growing rapidly over the last decade. It achieved annual revenue per share growth of 19.8% on average annually, and EBITDA growth per share of 14.9% on average annually. In the last five years the company’s stock ran up 44%, and it has a P/E ratio of 20.95.