Chuck Royce Invests in 3 Industrial Companies in 2nd Quarter

The guru invested in 2 newly public companies

Author's Avatar
Aug 09, 2017
Article's Main Image

Chuck Royce (Trades, Portfolio), chairman and portfolio manager of the Royce Funds, gained 44 new holdings during the second quarter, three of which were industrial stocks. He established positions in Seacor Marine Holdings Inc. (SMHI, Financial), Engility Holdings Inc. (EGL, Financial) and ASV Holdings Inc. (ASV, Financial).

With $17.6 billion in assets under management as of Dec. 31, 2016, Royce favors the industrial sector as it has a portfolio weight of 26.4%. For comparison, the technology sector has a weight of 20.3% and consumer cyclical stocks compose 19.3% of the portfolio.

Seacor Marine Holdings

In his largest new buy for the quarter, Royce purchased 1.9 million shares of Seacor Marine Holdings for an average price of $19.84 per share, giving it 0.26% portfolio space.

The company, which was spun off Seacor Holdings Inc. (CKH, Financial) earlier this year, operates a fleet of vessels that serve offshore oil and gas drillers. With a market cap of $248.28 million, its shares were trading around $14.05 on Wednesday with a price-book (P/B) ratio of 0.41.

The graph below shows the trend in the stock price since the company’s initial public offering in early June.

872460510.png

GuruFocus ranked Seacor Marine’s financial strength 4 of 10 and its profitability and growth 3 of 10.

Royce is the company’s largest guru shareholder with 11.03% of outstanding shares. First Eagle Investment (Trades, Portfolio) also owns the stock.

Engility Holdings

Royce bought 261,147 shares of Engility Holdings for an average price of $27.87 per share, expanding the portfolio 0.05%.

The employment services company has a market cap of $1.13 billion; its shares were trading around $30.27 on Wednesday with a price-earnings (P/E) ratio of 279.82, a P/B ratio of 1.6 and a price-sales (P/S) ratio of 0.57.

According to the Peter Lynch chart below, the stock is trading above its fair value.

1502287686585.png

GuruFocus ranked Engility’s financial strength 4 of 10 and its profitability and growth 3 of 10.

With his purchase, Royce became the company’s largest guru shareholder with 0.71% of outstanding shares. Jim Simons (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) are also shareholders.

ASV Holdings

Royce purchased 138,990 shares of ASV for an average price of $8.1 per share, giving it a portfolio weight of 0.01%.

The compact construction equipment manufacturer, which was previously a joint venture of Manitex International Inc. (MNTX, Financial) and Terex Corp. (TEX, Financial), went public in May. With a market cap of $78.3 million, its shares were trading around $7.99 on Wednesday with a forward P/E ratio of 26.67 and a P/B ratio of 1.46.

The graph below illustrates the trend in the stock’s price since the company’s IPO in May.

411060.png

GuruFocus ranked ASV’s financial strength 4 of 10 and its profitability and growth 3 of 10.

With 1.42% of its outstanding shares, Royce is the company’s only guru shareholder.

Other industrial stocks in Royce’s portfolio include Lincoln Electric Holdings Inc. (LECO, Financial), Landstar Systems Inc. (LSTR, Financial), Valmont Industries Inc. (VMI, Financial) and Hubbell Inc. (HUBB, Financial).

Disclosure: I do not own any stocks mentioned.