Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake

GuruFocus.com

- By Sydnee Gatewood

Royce Investment Partners revealed earlier this week it reduced three positions and added to another in December.

The New York-based firm, which was founded in 1972 by Chuck Royce (Trades, Portfolio), specializes in small-cap companies. The portfolio management team picks stocks based on an active, bottom-up, risk-conscious and fundamental approach. They also search for value opportunities among companies trading at a discount to enterprise value.


According to Real-Time Picks, a Premium GuruFocus feature, the firm curbed its holdings of Kimball International Inc. (NASDAQ:KBAL), Synalloy Corp. (NASDAQ:SYNL) and Seacor Marine Holdings Inc. (NYSE:SMHI) on Dec. 31. It also added to its position in Northwest Pipe Co. (NASDAQ:NWPX).

Kimball International

After reducing the Kimball International position by 5.74% in the third quarter, the firm slashed it another 90.31%, selling 1.56 million shares. The trade had an impact of -0.2% on the equity portfolio. The stock traded for an average price of $11.95 per share on the day of the transaction.

Royce's firm now holds 167,388 shares of Kimball total, representing 0.02% of the equity portfolio. GuruFocus estimates the firm has gained 12.94% on the investment.

Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake
Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake

The Jasper, Indiana-based company, which owns three furniture brands, has a $470.84 million market cap; its shares were trading around $12.79 on Thursday with a price-earnings ratio of 13.61, a price-book ratio of 1.92 and a price-sales ratio of 0.7.

The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued. The GuruFocus valuation rank of 7 out of 10 also supports this assessment.

Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake
Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake

GuruFocus rated Kimball International's financial strength 9 out of 10. In addition to a comfortable level of interest coverage, the high Altman Z-Score of 5.93 indicates the company is in good standing. The return on invested capital also significantly surpasses the weighted average cost of capital, indicating good value creation.

The company's profitability scored a 7 out of 10 rating, driven by an expanding operating margin, returns that outperform over half of its competitors and a high Piotroski F-Score of 7, which indicates business conditions are healthy. Kimball International also has a predictability rank of one out of five stars, which is on watch as a result of revenue per share declining over the past 12 months. According to GuruFocus, companies with this rank return an average of 1.1% annually over a 10-year period.

Of the gurus invested in Kimball International, Jim Simons (Trades, Portfolio)' Renaissance Technologies has the largest stake with 6.81% of outstanding shares. Other top guru shareholders are Jeremy Grantham (Trades, Portfolio), Mario Gabelli (Trades, Portfolio) and Caxton Associates (Trades, Portfolio).

Synalloy

With an impact of -0.04% on the equity portfolio, the firm curbed its Synalloy holding by 49.92%, selling 465,793 shares. Shares traded for an average price of $7.80 each on the day of the transaction.

The firm now holds 467,379 shares total, accounting for 0.04% of the equity portfolio. GuruFocus data shows it has lost 11.2% on the investment so far.

Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake
Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake

The company, which is headquartered in Richmond, Virginia, manufactures metals and chemicals. Synalloy has a market cap of $75.61 million; its shares were trading around $8.30 on Thursday with a price-book ratio of 0.85 and a price-sales ratio of 0.28.

According to the median price-sales chart, the stock is undervalued. The GuruFocus valuation rank of 9 out of 10 aligns with this assessment.

Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake
Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake

Synalloy's financial strength was rated 3 out of 10. Due to issuing approximately $43.84 million in new long-term debt over the past three years, the company has poor interest coverage. The Altman Z-Score of 2.04 also indicates it is under some pressure since the company has recorded losses in operating income over the past three years.

Weighed down by negative margins and returns that underperform a majority of industry peers, the company's profitability scored a 5 out of 10 rating. Synalloy's Piotroski F-Score of 4 indicates business conditions are stable, but its one-star predictability rank is on watch as a result of revenue per share declining over the past year.

Royce's firm is still Synalloy's largest guru shareholder with 5.13% of outstanding shares. Simons' firm also owns the stock.

Seacor Marine Holdings

Impacting the equity portfolio by -0.01%, Royce's firm reduced its Seacor Marine position by 65.97%, selling 420,499 shares. The stock traded for an average per-share price of $2.71 during the quarter.

Royce Investment Partners now holds 216,957 shares total, making up 0.01% of the equity portfolio. GuruFocus data shows the firm has lost an estimated 68.63% on the investment so far.

Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake
Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake

The Houston-based company, which provides marine and support transportation services to offshore oil producers, has a $78.02 million market cap; its shares were trading around $3.34 on Thursday with a price-book ratio of 0.2 and a price-sales ratio of 0.45.

Based on the median price-sales chart, the stock appears to be overvalued.

Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake
Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake

GuruFocus rated Seacor Marine's financial strength 2 out of 10. The Altman Z-Score of 0.08 warns the company could be in danger of going bankrupt if it does not improve its liquidity position. It has also recorded a decline in revenue per share over the past three years.

The company's profitability fared even worse, scoring a 1 out of 10 rating on the back of negative margins and returns that underperform a majority of competitors. Seacor Marine is supported, however, by a moderate Piotroski F-Score of 4.

Royce's firm holds 0.93% of the company's outstanding shares.

Northwest Pipe

Following a 3.28% reduction in the third quarter, the firm upped its stake in Northwest Pipe by 10.01%, buying 93,450 shares. The trade had an impact of 0.03% on the equity portfolio. The stock traded for an average price of $28.30 per share on the day of the transaction.

Royce's firm now holds 1.02 million shares total, giving it 0.31% space in the equity portfolio. GuruFocus data shows it has gained approximately 15.35% on the investment so far.

Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake
Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake

Headquartered in Vancouver, Washington, the company, which manufactures engineered welded steel pipe water systems, has a market cap of $292.88 million; its shares were trading around $29.87 on Thursday with a price-earnings ratio of 11.39, a price-book ratio of 1.13 and a price-sales ratio of 1.

The Peter Lynch chart suggests the stock is undervalued. The GuruFocus valuation rank of 7 out of 10 aligns with this assessment.

Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake
Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake

Northwest Pipe's financial strength was rated 7 out of 10 by GuruFocus, driven by a comfortable level of interest coverage and a high Altman Z-Score of 3.85. The ROIC also eclipses the WACC, indicating good value creation.

The company's profitability did not fare quite as well, scoring a 4 out of 10 rating on the back of margins and returns that outperform a majority of industry peers. Northwest Pipe also has a moderate Piotroski F-Score of 5 as well as a one-star predictability rank.

With a 10.47% stake, Royce's firm is the company's largest guru shareholder. Prem Watsa (Trades, Portfolio) and Simons' Renaissance Technologies also have positions in the stock.

Portfolio composition and performance

Nearly half of Royce Investment Partners' $9.27 billion equity portfolio, which was composed of 989 stocks as of the end of the third quarter, was invested in the industrials and technology sectors, followed by smaller holdings in the financial services and consumer cyclical spaces.

Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake
Chuck Royce's Firm Closes Out 2020 by Slashing 3 Holdings, Adding to 1 Stake

According to the firm's website, the Royce Premier Fund returned 34.13% in 2019, outperforming both the S&P 500 Index's return of 31.49% and the Russell 2000's 25.52% return. Performance data for fiscal 2020 has not yet been released.

Disclosure: No positions.

Read more here:

  • Wallace Weitz Further Pares Stake in Intelligent Systems

  • 4 Health Care Stocks to Consider as Covid-19 Vaccine Distribution Continues

  • Third Avenue Value Fund Enters 3 Positions in 4th Quarter



Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.

Latest Stories

  • Intelligence agencies say SolarWinds cyber compromise perpetrator 'likely Russian'

    U.S. intelligence and national security agencies on Tuesday pointed to Russian hackers as the culprit behind an unprecedented digital breach of thousands of public and private sector networks.

  • Pakistani Shiites continue sit-in over killing of 11 miners

    Hundreds of minority Shiites continued a sit-in for a fourth straight day Wednesday in southwestern Pakistan to protest the killing of 11 Shiite Hazara coal miners by the Islamic State group. Despite Prime Minister Imran Khan's request that the miners be buried, family members insisted they would do so only when Prime Minister Imran Khan personally visits them to assure their protection.

  • Giuliani pushed senators to block Biden victory even after riots began, misdialed voicemail reveals

    Donald Trump’s lawyer tried to block the count of the Electoral College votes as Capitol was still recovering from violence

  • China steps up COVID-19 curbs near Beijing as infections rise

    Chinese authorities on Wednesday imposed travel restrictions and banned gatherings in the capital city of Hebei province, which surrounds Beijing, in the latest escalation of measures to stave off another coronavirus wave. The province, which entered a "wartime mode" on Tuesday, accounted for 20 of the 23 new locally transmitted COVID-19 cases reported in mainland China on Jan. 5, more than the total of 19 cases in the province in the three previous days. Hebei also accounted for 43 of 64 new asymptomatic cases - people infected with the SARS-CoV-2 virus but not yet showing symptoms of COVID-19.

  • Trump supporters in Georgia explain why they believe the president's claims of voter fraud

    President Trump supporters at a Monday rally held onto his every word, repeatedly chanting, “Stop the steal” and “U-S-A.” In interviews with Yahoo News, they explained why, despite the lack of evidence to support the president’s claims, they continue to repeat them.

  • Mexico to ask help to get vaccines for migrants in US

    Mexico said Wednesday it has been trying to get help from non-profit groups or the U.S. government to get coronavirus vaccines for Mexican migrants working in the United States. President Andrés Manuel López Obrador said Mexico would keep trying “because it is a universal right.” Migrants without documents often have trouble accessing health services in the U.S.

  • BLM protests vs pro-Trump rioters: Pictures show the stark difference in police response

    Images shared on social media highlighted the stark divide between law enforcement’s response to last summer's Black Lives Matter protests, and Wednesday’s right-wing rioters who stormed the US Capitol. Many on Twitter were quick to point out how differently law enforcement behaved over the summer, deploying rubber bullets and tear gas in many instances across the country. "The police suddenly very hesitant to use their weapons," wrote one Twitter user next to a violent video of rioters pushing and shoving their way into the Capitol.

  • EU no longer acknowledges Venezuela's Guaido as interim president

    The European Union can no longer legally recognise Venezuelan opposition leader Juan Guaido as the country's legitimate head of state after he lost his position as head of parliament, the bloc's 27 governments said on Wednesday. Guaido is still seen by the United States and Britain as Venezuela's rightful leader following the disputed 2018 re-election of President Nicolas Maduro, and two EU diplomats stressed the EU still did not recognise Maduro as president. An EU statement on Wednesday threatened further sanctions against the Maduro government, on top of an arms embargo and sanctions on Venezuelan officials already imposed, to decry what it views as rights violations and the rupture of democracy.

  • A confident Stacey Abrams says Georgia runoffs are 'just the beginning'

    On Tuesday, the former gubernatorial candidate Stacey Abrams was once again out seeking to secure more votes for Georgia Democratic hopefuls Jon Ossoff and the Rev. Raphael Warnock.

  • Qatar emerges from Gulf spat resolute and largely unscathed

    Qataris awoke to a surprise blockade and boycott by Gulf Arab neighbors 3 1/2 years ago, and this week were jolted again by the sudden announcement that it was all over. Criticism of the boycott was a criminal offense in Saudi Arabia, the United Arab Emirates, Bahrain and Egypt as the four sought to punish Qatar. Qatar’s resolve in the face of the assault showed how little the campaign achieved as the small, but influential U.S. ally holds firm with its ties to Turkey, Iran and Islamists.

  • Huckabee: 'I'd love to see some Democrats' demand a 'full accounting' of election results

    Former Arkansas Gov. Mike Huckabee weighs in on GOP senators demanding an audit of the 2020 election results saying he wishes that 'all the elected officials would demand a full accounting for how the ballots were tabulated.'

  • Mexico shares Biden focus on migration's root causes, ministry says

    Mexico's foreign ministry said on Wednesday that U.S. President-elect Joe Biden's team shares its vision of international aid and economic development for Central America to achieve orderly and safe migration. Foreign Minister Marcelo Ebrard and Jake Sullivan, Biden's pick for national security adviser, agreed during a video meeting that both governments will prioritize the structural causes of migration, the Mexican statement said.

  • House nearly devolves into a brawl during the objection to Pennsylvania electors

    Tempers flared on the House floor early Thursday during speeches for and against an objection to recognizing President-elect Joe Biden's electoral win in Pennsylvania — the final hurdle in the counting of Electoral College votes, delayed by the occupation of the Capitol on Wednesday by a mob supporting President Trump. Rep. Conor Lamb, a moderate Democrat from Pennsylvania, lit into his Republican colleagues, telling them their objections have no merit and "don't deserve an ounce of respect. A woman died out there tonight, and you're making these objections."There was a commotion from the GOP side after Lamb said the people storming the Capitol would have been arrested if they weren't white, prompting House Speaker Nancy Pelosi (D-N.Y.) to call for order. "Enough has been done today already to try to strip this Congress of its dignity, and we don't need to do any more," Lamb said, adding that some of his colleagues had fueled the mob by repeating lies about the election. A few moments later, Rep. Andy Harris (R-Md.) objected, saying Lamb was calling him a liar. Pelosi shot down the objection, and then things nearly came to blows.> "There will be order in the House."> > Watch tensions rise on House floor during debate on Pennsylvania ElectoralCollege Vote Objection.> > Note: C-SPAN does not control cameras in the House. pic.twitter.com/sQ1vAIxc0t> > — CSPAN (@cspan) January 7, 2021The benches cleared, and the deputy sergeant at arms got involved. PBS's Lisa Desjardins explains what happened off-camera:> 6\. Democrats got on feet, from other side of the chamber many (a dozen?) started moving quickly, almost running thru rows to where Harris was. > 7\. Republicans started doing same. > 8\. A staffer - it may have been the Sgt. at Arms moved even more quickly to separate them.> > 2/> > — Lisa Desjardins (@LisaDNews) January 7, 2021"We want this government to work more than they want it to fail," Lamb said after the fight was defused, then ceded the floor.More stories from theweek.com Impeachment seemingly off the table as House, Senate depart until inauguration Trump aides reportedly conclude he is 'mentally unreachable' Barr rips Trump over Capitol riots: 'A betrayal of his office and supporters'

  • AP Photos: Indian army patrols border with rival Pakistan

    From sandbagged Indian army bunkers dug deep into the Pir Panjal mountains in the Himalayas, villages on the Pakistan-controlled side of Kashmir appear precariously close, on the other side of the Line of Control that for the past 73 years has divided the region between the two nuclear-armed rivals. Tens of thousands of soldiers from India and Pakistan are positioned along the two sides. AP journalists were recently allowed to cover Indian army counterinsurgency drills in Poonch and Rajouri districts along the Line of Control.

  • Breonna Taylor: Two Louisville officers fired over roles in shooting

    The police officer who the FBI said fired the fatal shot is dismissed for breaching policy.

  • Mexico's president sets out vaccination plan, targets rural areas

    Mexican President Andres Manuel Lopez Obrador on Tuesday set out plans to vaccinate the country's population and said the government hoped to inoculate the country's elderly by the end of March. So far, the country has administered jabs to about 44,000 healthcare workers using Pfizer's COVID-19 vaccine, the only one available in the country so far, but authorities hope to ramp up vaccinations in coming weeks. "We are going to start at the bottom, where the most marginalized people live," Lopez Obrador told his daily morning news conference.

  • D.C. Police: 4 people died during pro-Trump siege of the Capitol, including woman shot by police

    Four people died Wednesday on Capitol Hill as a crowd backing President Trump stormed and occupied the Capitol complex for several hours, Washington, D.C., Metropolitan Police Chief Robert Contee said Wednesday night. D.C. police are investigating the fatal shooting of one unidentified woman by a federal Capitol Police officer, he said, and the other three deaths — one woman and two men — have been attributed to medical emergencies.Fourteen officers were injured in the riot, including at least two who were hospitalized after being injured during the melee.> UPDATE from D.C. Chief of Police Robert Contee:> > \- More than 52 people arrested > \- 2 pipe bombs recovered > \- Cooler w/ long gun and molotov cocktails pic.twitter.com/CDsEk5oqh3> > — WSVN 7 News (@wsvn) January 7, 2021> DC Police: 4 people died as Trump supporters occupied Capitol; 1 woman shot by police, 3 in medical emergencies. pic.twitter.com/qZyM850iRa> > — WSVN 7 News (@wsvn) January 7, 2021Contee said more than 52 people were arrested during Wednesday's mob violence, half of them on Capitol grounds, and police found two pipe bombs and several unlawful pistols, plus a cooler containing a long gun and Molotov cocktails discovered in a truck on the Capitol grounds.More stories from theweek.com Impeachment seemingly off the table as House, Senate depart until inauguration Trump aides reportedly conclude he is 'mentally unreachable' Barr rips Trump over Capitol riots: 'A betrayal of his office and supporters'

  • Inside Fashion Designer Brian Atwood’s Vibrant Apartment 64 Floors Above Manhattan

    The Hudson Yards aerie, which Atwood shares with his physician husband Jake Deutsch, is literally “a glass box in the sky.”Originally Appeared on Architectural Digest

  • Biden to introduce Judge Merrick Garland as attorney general

    President-elect Joe Biden will introduce Merrick Garland as his pick for attorney general on Thursday along with three others he has selected for senior Justice Department positions to “restore the independence” of the agency and faith in the rule of law. In picking Garland, a federal appeals judge, Biden is turning to an experienced judge who held senior positions at the Justice Department decades ago, including as a supervisor of the prosecution of the 1995 Oklahoma City bombing. Garland's nomination will force Senate Republicans to contend with someone they spurned four years ago — refusing even to hold hearings when President Barack Obama nominated Garland for the Supreme Court.

  • Impossible Foods cuts wholesale prices by 15% for second time in one year

    The price cut is its second in a year and the California-based company is asking distributors to pass on the savings to restaurants and consumers. The Beyond Meat rival has tied up with several restaurants including Burger King, Starbucks and White Castle, and expanded its retail footprint to thousands of stores across the United States last year. With the latest cut, the lowest possible price to distributors for the Impossible Burger would be $6.80 per pound, but it is still significantly higher than ground beef prices which range from about $2 to $3 per pound for low fat and non-organic varieties, according to the United States Department of Agriculture.