Steven Romick

Steven Romick

Last Update: 10-10-2016
Related: First Pacific Advisors
Robert Rodriguez

Number of Stocks: 50
Number of New Stocks: 2

Total Value: $9,337 Mil
Q/Q Turnover: 4%

Countries: USA GBR NOR FRA BEL ESP DEU MYS JPN
Details: Top Buys | Top Sales | Top Holdings  Embed:

Steven Romick Watch

  • Aon: A Stock for Risky and Uncertain Times

    Aon PLC (NYSE:AON) is an insurance brokerage company and a consulting company. When the world gets riskier, other companies turn to insurance to offload some of that risk. When the world gets more uncertain, other companies turn to consultants for advice and solutions.


    The current environment suggests these should be good times for Aon, but its share price has dipped lately. Looking at a year-to-date chart indicates this is just another blip on the upward journey of the share price, or is it?

      


  • Regional US Banks Offer Strong Predictable Value

    Three regional banks, Bank of the Ozarks Inc. (NASDAQ:OZRK), Prosperity Bancshares Inc. (NYSE:PB)  and Signature Bank (NASDAQ:SBNY), have high predictability and trade below their 10-year median price-earnings ratio. With high profitability and strong upside potential, these companies offer strong value potential in the short term.


    Regional US banks have high number of undervalued companies based on P/E (ttm)

      


  • Steven Romick's FPA Crescent Fund 3rd Quarter Commentary

    Dear Shareholders:

      


  • Steven Romick's Top 3rd Quarter Buys

    Steven Romick (Trades, Portfolio) is the portfolio manager of FPA Crescent Fund and the following are the guru's top-performing stocks for the third quarter.


    Ally Financial Inc. (NYSE:ALLY)

      


  • Steven Romick Trims Microsoft Stake

    Guru and contrarian investor Steven Romick (TradesPortfolio) trimmed his stake in Microsoft (NASDAQ:MSFT) during the third quarter, removing 1,405,260 shares from his award-winning FPA Crescent Fund for an average price of $56.45. The trade has a -0.70% impact on Romick’s portfolio. He now owns 6,327,480 shares of Microsoft.


    Microsoft has a market cap of $449 billion, an enterprise value of $387.89 billion, a price-earnigns (P/E) ratio of 27.97 and a price-book (P/B) ratio of 6.24.

      


  • FPA Boosts Position in Esterline Technologies

    First Pacific Advisors (Trades, Portfolio) increased its position in Esterline Technologies Corp. (NYSE:ESL) on Sept. 16.


    In Esterline, the firm purchased 220 shares for an average price of $74.96 per share. The transaction increased its stake by 0.01% to 3,690,774 shares.

      


  • Steven Romick Slashes Genting Stake

    Steven Romick slashed 15,312,690 shares of Genting (XKLS:4715) from his portfolio at an average price of 4.43 Malaysian ringgit ($1.10) in the second quarter. The trade had a -0.19% impact on Romick’s portfolio. He now owns 41,441,930 shares in the company.


    Genting is a leisure and hospitality company that offers casinos, hotels and spas, restaurants and bars, as well as shows and events, and movie theaters. The company was incorporated on May 7, 1980, and has locations in Singapore, Malaysia, the Philippines and New York City.

      


  • Steven Romick Exits Carlsberg

    Steven Romick sold out his remaining 389,330 shares in Carlsberg (OCSE:CARL B) in the second quarter at an average price of 627.11 Danish krone ($94.01) per share.


      


  • Steven Romick's FPA Crescent Fund Second Quarter 2016 Commentary

    Dear Shareholders:

      


  • Steven Romick Reduces Stake in Henkel

    Steven Romick trimmed his stake in Henkel (XTER:HEN) by 11.83%, selling 151,340 shares in the second quarter.


    The company is headquartered in Düsseldorf, Germany, and it operates its business worldwide in three segments: Adhesive Technologies, Beauty Care and Laundry & Home Care.

      


  • Steven Romick Slashes Stake in Occidental Petroleum

    Guru Steven Romick slashed his stake in Occidental Petroleum Corp. (NYSE:OXY) during the second quarter. Romick sold 2,482,160 shares for an average price of $74.73. The trade had a -1.8% impact on his portfolio.


    Occidental Petroleum Corporation is an international oil and gas exploration and production company headquartered in Houston. The company provides its services internationally with operations in the U.S., Middle East and Latin America. Occidental is one of the largest U.S. oil and gas companies, based on equity market capitalization.

      


  • Steven Romick Made 4 New Buys and Increased 2 Positions in 2nd Quarter

    Steven Romick (Trades, Portfolio), portfolio manager of the FPA Crescent Fund, seeks long-term equity returns while avoiding permanent capital impairment and limiting the fund’s exposure to risk. An absolute value investor, Romick only invests in companies that offer absolute economic risk/reward propositions. The fund’s return since inception is 10.26%, which outperforms the Standard & Poor’s 500 index by about 1.3%. Additionally, Morningstar analysts gave FPA Crescent Fund a gold rating, praising the fund’s ability to sustain its capital gains during economic downturns.


    Currently, Romick’s fund contains 57.6% in common equity and 36.3% in cash. According to Morningstar analysis, the fund manager only invests in stocks trading at deep discounts, i.e., “substantial discounts to [the stocks’] economic growth.” During the second quarter, Romick made four new stock buys and increased his position in two other companies.

      


  • Steven Romick: Will Brexit Spark a Much-Needed Market Revaluation?

    Markets globally have reacted negatively to the British having voted to leave the European Union (EU) after more than four decades. The night before the vote, UK betting markets reflected that the “remain” camp was heavily favored to win. In a 2015 speech titled, “Don’t be Surprised,” I wrote that

      


  • Steven Romick Adds to Bank of America Stake

    Steven Romick added 5,850,370 shares to his stake in Bank of America Corporation (NYSE:BAC) in the first quarter.


    Bank of America is one of the world’s largest financial institutions, serving individual consumers, small- and middle-market businesses, institutional investors, large corporations and governments with a full range of banking, investing, asset management and other financial and risk management products and services. Through Bank of America’s banking and various nonbank subsidiaries throughout the U.S. and in international markets, it provides a diversified range of banking and nonbank financial services and products through five business segments: Consumer Banking, Global Wealth & Investment Management, Global Banking, Global Markets and Legacy Assets & Servicing with the remaining operations recorded in All Other.

      


  • First Pacific Advisors Invests in American Express, AIG, Alcoa

    Robert L. Rodriguez, CFA, is the chief executive officer of First Pacific Advisors (Trades, Portfolio) Capital, which bought shares in many companies in the first quarter:


    The fund raised its stake in CIT Group Inc. (CIT) by 120.20% with an impact of 1.98% on the portfolio.

      


  • Steven Romick Comments on Citigroup

    Our equity exposure to financials has increased to 20.5%, up from a net negative exposure in 2008 and higher than the S&P 500’s current weighting of 15.6%. We seek the inexpensive and care not a whit about market weightings. Financials, particularly lenders, meet that hurdle. Citigroup, as an example, traded down to ~60% of tangible equity at one point in the first quarter. We believe tangible equity is pretty solid, even after assuming a higher level of charge-offs. Investors will frequently act as if they are still fighting their last war but the balance sheets of U.S. banks and thrifts are far stronger now than they were in 2008 when many financial institutions were wounded and close to dying.

    On the eve of the global financial crisis, Citi (NYSE:C) had just 3% tangible equity propping up its tangible assets whereas today, it has 10.5%, higher by a factor of more than three. Some of Citi’s loans will default and it won’t get full recovery in all cases. When we stress test its balance sheet and assume an unusually bad outcome for its loan book, its capital ratios remain solid. If half of its China, energy and metals & mining loans were to default this year and Citi recovered just 40 cents on the dollar, and if consensus earnings are correct, then Citi would still earn money this year and end 2016 with more than $60 per share of tangible book value and tangible equity to tangible assets of more than 10%. That would mean book value would actually increase despite the write-offs. We, therefore, thought Citi at a 40% discount to its minimum worth was a great risk/reward. We purchased additional shares in the midst of its Q1 downturn along with shares of other lenders that saw similar declines.


    From Steven Romick (Trades, Portfolio)'s Crescent Fund first quarter commentary letter.   


  • Steven Romick's 1st Quarter Crescent Fund Commentary

    Dear Shareholders:

      


  • Steven Romick Keeps On Buying Cisco, American Express

    Steven Romick (Trades, Portfolio) is the portfolio manager of FPA Crescent Fund. As of Jan. 31, the fund had delivered more than 11% a year on average over the past 10 years. The following are the companies the investor has been buying for at least the last two quarters.


    Esterline Technologies Corp. (ESL)

      


  • Steven Romick Adds to Stake in Alcoa

    Guru Steven Romick added 6,932,590 shares to his stake in Alcoa Inc. (NYSE:AA) in the first quarter.


    Alcoa was founded nearly 128 years ago on Oct. 1,1888, as the Pittsburgh Reduction Company. The company was based on technology developed by Alcoa's co-founder, Charles Martin Hall.

      


  • Donald Yacktman Reduces Stake in Oracle

    Donald Yacktman (Trades, Portfolio) founded Yacktman Asset Management in 1992. Prior to this, he served as a senior portfolio manager at Selected Financial Services Inc.


    Yacktman is the co-manager for AMG Yacktman Focused Fund (Trades, Portfolio) and the award winning AMG Yacktman Fund (Trades, Portfolio). He was awarded the 1994 Portfolio Manager of the Year award by Mutual Fund Letter.

      


  • Steven Romick Doubles Down on American Express

    Contrarian value investor Steven Romick doubled down his holding in American Express (NYSE:AXP), adding 2,410,999 shares to his portfolio on March 31.


    American Express has a market cap of $58.5 billion, a P/E ratio of 12.06, an enterprise value of $86.61 billion and a dividend yield of 1.91.

      


  • Acquisition Makes Leucadia 15th-Largest Stake in Romick's Portfolio

    Steven Romick (Trades, Portfolio), portfolio manager of FPA Crescent Fund, bought only one new stake in the first quarter, but it was big enough to become the 15th-largest stake in his portfolio.


    Romick acquired a 17,836,443-share stake in Leucadia National (Trades, Portfolio) Corp. (NYSE:LUK), a New York-based holding company, for an average price of $15.73 per share. The purchase had a 3.06% impact on Romick’s portfolio.

      


  • Citigroup, Amgen Are Trading With Wide Margin of Safety

    The following are some of the stocks that are trading below the Peter Lynch earnings line, according to GuruFocus' All-in-One Screener.


    Citigroup Inc. (C) is trading at about $42, but the Peter Lynch earnings line gives the company a fair price of $57.62, giving the stock a margin of safety of 27%. It is trading with a PE ratio of 7.78 that is ranked higher than 78% of its competitors in the Global Banks - Global industry, and is currently 31.22% below its 52-week high and 21.44% above its 52-week low.

      


  • Paul Singer Invests in Stake in Alcoa

    Guru Paul Singer (Trades, Portfolio) purchased a 67,100,000-share stake in Alcoa Inc. (NYSE:AA) in the fourth quarter.


    Alcoa was originally founded on Oct. 1, 1888, as the Pittsburgh Reduction Company. It was based on technology developed by Alcoa's co-founder, Charles Martin Hall. Alcoa is the global industry leader among companies that engineer and manufacture lightweight metals. Alcoa produces aluminum, titanium and nickel, which are used in aircraft, automobiles, commercial transportation, packaging, oil and gas, defense and industrial applications.

      


  • FPA Crescent Fund Q4 2015 Webcast Slides



  • FPA Crescent Fund's Q4 2015 Webcast Transcript



  • Market Valuations and Expected Returns Jan. 2016

    The market had its worst January in many years. This has generated quite some fear in the market and has prompted Howard Marks (Trades, Portfolio) written two memos in January: On the Coach and What Does the Market Know? We strongly recommend you to read both if you haven’t done so.


    Regarding to market valuations, we agree with what Steven Romick (Trades, Portfolio) said in his latest quarterly commentary:

      


  • Steven Romick Comments on Joy Global

    Joy Global (NYSE:JOY) was with hindsight an outright mistake, a poor investment decision that we wish we could take back. When analyzing the situation, we gave too much weight to the company’s strong market position and attractive aftermarket sales profile. We failed to appreciate the degree to which the coal market had changed. Many regions in which Joy has a particularly strong competitive position are likely to produce significantly less coal going forward. This has resulted in a permanent impairment to our position in Joy. Realizing our mistake, we have reduced the position.


    From Steven Romick (Trades, Portfolio)'s FPA Crescent Fund 4th quarter commentary.   


  • Steven Romick Comments on Alcoa

    Weak aluminum prices and inventory adjustments in the aerospace supply chain negatively impacted Alcoa (NYSE:AA)’s profitability and its stock price in 2015. We support the company’s decision to separate its highly engineered, value-added aerospace business from its commodity aluminum operations. As the price has declined in the last year, we have doubled the number of shares we own and are hopeful that the pending spin-off will create clarity and value for the enterprise.


    From Steven Romick (Trades, Portfolio)'s FPA Crescent Fund 4th quarter commentary.   


  • Steven Romick Comments on Oracle

    We had some puts and takes that drove 2015’s performance. Microsoft and Alphabet (formerly Google) performed quite well but Oracle lagged. Oracle (NYSE:ORCL) continued to transition its business to the cloud last year but it has been proceeding more slowly than investors or the company expected. Concern about the transition and weak software license sales led to the stock’s decline. Given the undemanding valuation and high level of recurring revenue, we used a drop in the share price to increase our position.


    From Steven Romick (Trades, Portfolio)'s FPA Crescent Fund 4th quarter commentary.   


  • Steven Romick's FPA Crescent Fund 4th Quarter 2015 Commentary

    Dear Shareholders:

      


  • Steven Romick Reduces 7 Stakes in 4th Quarter

    Guru Steven Romick (Trades, Portfolio), portfolio manager of FPA Crescent Fund, reduced seven stakes in his portfolio in the fourth quarter.


    Romick’s most noteworthy reduction in the fourth quarter was his sale of 3,078,502 shares of Microsoft Corp. (NASDAQ:MSFT), a Redmond, Washington-based computer company, for an average price of $52.75 per share. The transaction reduced Romick’s stake by nearly 21% and had an impact of -1.46% on his portfolio.

      


  • Steven Romick Sells Microsoft, Walgreens, CVS

    Steven Romick (Trades, Portfolio) sold many stocks during the fourth quarter. He is the portfolio manager of the FPA Crescent Fund and the following are the most weighted sales during the last quarter of 2015.


    He reduced his stake in Microsoft Corp. (MSFT) by 20.99% with an impact of 1.46% on the portfolio. The current stake is 6.76% of the investor’s total assets.

      


  • Crescent Fund's Romick Increases 8 Portfolio Positions in Q4

    Though FPA Crescent Fund manager Steven Romick (Trades, Portfolio) took advantage of a bumpy third quarter market to buy five attractive stocks at low-priced windows, he found nothing new to acquire in a less volatile fourth quarter.


    “Volatility has always been our friend and we’re wistful for its return. ‘Vol’ has become a euphemism for something bad, like market declines (you’ll note that there’s not a lot of conversation around upside vol),” he told his shareholders in a third quarter letter. “For us though, bad can be good. Volatility can cause investors to sell and sometimes to do so indiscriminately. Being of sound(er) mind, we have captured some of that opportunity in the past and expect to do so again in the future.”

      


  • Romick Gains 75% Return on Baytex Energy

    Contrarian defensive investor Steven Romick serves as the portfolio manager of the award winning FPA Crescent Fund. He joined FPA Funds in 1996 after graduating with a bachelor's degree in education from Northwestern University. In the second quarter of 2013, Romick shorted Baytex Energy Corp. (TSX:BTE) at an average price of C$39.29. In the third quarter of 2015, Romick bought to cover his position at C$9.91, profiting a 75% return.


    The Baytex Energy holding has peaked at C$58.32 per share in January 2012 and since then has been dropping in price at a significant rate.

      


  • Health Care Stocks Play Prominent Roles in Steven Romick's Transactions

    The health care sector occupies a low position in Steven Romick (Trades, Portfolio)’s sector weightings, but those companies were among his most prominent third-quarter trades.


    Romick’s most noteworthy third-quarter transaction was the reduction of his stake in CVS Health Corp. (NYSE:CVS), a Woonsocket, Rhode Island-based health care company, by nearly 88%. Romick sold 3,639,490 shares for an average price of $105.29 per share. The deal had a -3.68% impact on Romick’s portfolio.

      


  • Romick Maintains Conviction in 3 Stocks With Declining Prices

    Steven Romick (Trades, Portfolio) joined FPA Funds in 1996 and runs the FPA Crescent Fund, which today manages more than $18 billion in assets. During the third quarter, Romick reiterated his conviction in several holdings that have seen prices decline over the past year, including the three below.

    The majority of assets are invested in North America at 70%, followed by 26% in Europe. The largest represented sector is technology at 35.8%, followed by 25.7% in financial services and 14% in industrials.  


  • Steven Romick Adds Esterline, American Express to FPA Crescent

    In the third quarter of 2015, guru Steven Romick bought three new holdings, adding to his award winning FPA Crescent Fund. Romick bought 2,636,450 shares of Esterline Technologies (ESL), 642,400 shares of American Express Co. (AXP), and 1,012,740 shares of Halliburton Co. (HAL).


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  • Steve Romick's 3rd Quarter Investor Presentation



  • FPA Crescent Fund – Third Quarter Investor Call Transcript



  • Walgreens Buys Rite Aid to Avoid Loose Market

    In May, Walgreens Boots Alliance Inc. (WBA)’s biggest competitor in the U.S., CVS Health Corp. (CVS), agreed to purchase nursing-home pharmacy Omnicare Inc. (OCR); a few weeks later, CVS signed a deal to acquire Target Corp. (TGT)’s pharmacies, expanding CVS Health’s retail presence in new markets, such as Seattle, Denver, Portland, Ore., and Salt Lake City by putting its brand, in retail locations across 47 states so WBA’s top rival in the U.S. has been getting bigger. This is why WBA’s next step is to acquire Rite Aid Corp. (RAD).


    Walgreens already has a foothold in the drug-distribution business after it signed a 10-year agreement with AmerisourceBergen Corp. (ABC) in 2013, and it became the company’s third-largest shareholder, but this agreement doesn’t stop the management's search for new profitable partnerships, and the reported fiscal fourth-quarter earnings shows how Walgreens Boots Alliance managed cost savings from mergers and it has saved $799 million in fiscal 2015 after combining with Alliance Boots GmbH last year.

      


  • Steven Romick's FPA Crescent Fund Third Quarter 2015 Commentary

    Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. This data represents past performance and investors should understand that investment returns and principal values fluctuate, so that when you redeem your investment it may be worth more or less than its original cost. Current month-end performance data may be obtained by calling toll-free, 1-800-982-4372.


    The Fund commenced investment operations on June 2, 1993. The performance shown for periods prior to March 1, 1996 reflects the historical performance of a predecessor fund. FPA assumed control of the predecessor fund on March 1, 1996. The FPA Crescent Fund's objectives, policies, guidelines and restrictions are, in all material respects, equivalent to those of the predecessor fund.

      


  • Steven Romick Sells CVS, Buys United Technologies

    Steven Romick (Trades, Portfolio) is the portfolio manager of FPA Crescent Fund, a Los Angeles-based money management firm practicing a disciplined approach to value investing, prudently seeking superior long-term returns while maintaining a focus on capital preservation.


    He manages a portfolio of 59 stocks with a total value of $9,351 million and the following are the most weighted trades during the third quarter .

      


  • Steven Romick Buys 3 New Stocks in Q3

    Steven Romick (Trades, Portfolio), president of the $19.6 billion FPA Crescent Fund (FPACX), bought three new stocks in the third quarter, he disclosed Thursday.


    The value-minded investor had more than 40% of his portfolio in cash in the end of the second quarter as markets continued their ascent.

      


  • Steve Romick: Interview With Barron's

    Steven Romick of FPA Crescent Fund did a video interview with Barron's where he discussed various topics with the interviewer. Romick said that he sees value in Oracle (NYSE:ORCL) and Microsoft (NASDAQ:MSFT). He went on to discuss why he believes investors should avoid energy stock and how cheap Russian equities are.


    Steve Romick interview with Barron's:

      


  • Steve Romick Has 40% Of His Fund In Cash – See What He Is Willing To Buy

    If you are a fund manager who is willing to sit with 40% of your fund in cash, chances are that you are only buying high quality stocks.


    Steven Romick currently has 40% of his fund in cash and doesn't see many opportunities that offer a margin of safety.

      


  • Steven Romick's Undervalued Stocks Trading With Low P/E Ratio

    Steven Romick (Trades, Portfolio) is the portfolio manager of FPA Crescent Fund. As of Jan. 31, the fund has delivered more than 11% a year in average over the past 10 years. His fund has about $10 billion under management and the following are the stocks he owns that are trading with a very low P/E ratio and that are undervalued according to the DCF calculator.



      


  • Steven Romick's FPA Crescent Fund Second Quarter 2015 Commentary

    Dear Shareholders:

      


  • JPMorgan Chase’s Earnings Results Meet Expectations for the Second Quarter

    JPMorgan Chase (NYSE:JPM) reported its earnings results for the second quarter on July 14. The company reported total revenue of $24.5 billion and net income of $6.3 billion resulting in earnings per share of $1.54. The report was on par with analysts’ expectations. Earnings per share beat estimates by $0.10. Revenue was basically on target with analysts’ average estimate of $24.5 billion.


    Consumer & Community Banking and Corporate & Investment Bank continued to be the two main revenue and income drivers for the firm. Consumer & Community Banking generated 45% of the firm’s revenue at $11.0 billion and 40% of the firm’s net profit at $2.5 billion. For the quarter, revenue was down 4% from one year ago and net income was 1% higher. In management’s comments it noted the firm’s consumer loan growth up 19% from the previous quarter. Interest revenue from consumer and community banking loans is expected to increase as rates rise.

      


  • GE, Union Pacific Among Most Widely Bought Industrial Stocks

    The industrial sector has been up 10.83% since the beginning of the year, according to Morningstar’s sector returns. And as the economy picks up momentum, the performance of stocks related to homebuilding, construction, and manufacturing have the potential to improve.


    The All-In-One-Screener can be used to find which industrial stocks the gurus are betting on in this sector. In the Fundamentals tab, select all industrial related stocks in the industry selection menu. Then, in the Gurus tab, click the checkbox for “Involved in Buy/Sell Activities” and select “5+ gurus” in the Recent Guru Buying/Adding field. For the time frame, select “Over the past 6 months”.

      


  • Steven Romick Adds to Eight Stakes in Second Quarter

    Steven Romick (Trades, Portfolio) is the portfolio manager of FPA Crescent Fund, which has averaged more than 11% in returns for the last decade. Its returns in 2014 were in single digits (6.64%), but it returned 21.95% in 2013 and 10.33% in 2012.


    In the second quarter of 2015, Romick added only one new stake to his personal portfolio – Henkel AG & Co KGaA (XTER:HEN3), a manufacturer of personal care products based in Düsseldorf, Germany. Romick bought 106,711 shares for an average price of €107.28 (about $118.46 in American money) per share. The purchase had a 0.12% impact on Romick’s portfolio.

      


  • Steven Romick Sells Stakes in 4 Companies

    Steven Romick (Trades, Portfolio) is the portfolio manager of FPA Crescent Fund. The Absolute Fixed Income Strategy aims to generate a positive absolute return through a combination of income and capital appreciation. To achieve this goal, they employ a total return strategy using investments in fixed income securities that focus on income, appreciation and capital preservation.


    The portfolio is composed of 65 stocks and during the first quarter of the year (Q1 2015), the investor mainly increased his existing stakes as reported in this article. However, he also reduced his stake in three companies and sold out one.

      


  • Steve Romick: Waiting for Another Bite at the Apple

    With little margin of safety available in today's market, the Gold-rated FPA Crescent manager is waiting for better opportunities.

      


  • Steven Romick Speech to CFA Society of Chicago - 'Don’t be Surprised'

    I’m reminded of a gentleman who discovers a genie in a bottle. Granted one wish only – apparently even genies have pricing power – the man asks for peace in the Middle East. The genie backs away and says, “That’s way too difficult. Give me something easier.” The man ponders his options and asks the genie instead, to help him pick a good mutual fund. The genie quickly responds, “Let me get to work on the Middle East.”


    I’m now entering my fourth professional decade managing money. And one thing I’ve learned is that there’s no shortage of surprises. What should happen, doesn’t always. What could happen comes to pass instead. And sometimes, what can’t happen actually does. Investing, like life, is imminently unpredictable. There are surprises – some good, some bad.

      


  • Steven Romick's FPA Crescent Fund First Quarter 2015 Commentary

    FPA Crescent Fund

      


  • Steven Romick FPA Funds Commentary - The Importance of Full Market Cycle Returns

    By Ryan Leggio and Steven Romick (Trades, Portfolio)


    A full market cycle can be defined as a peak-to-peak period that contains a price decline of at least 15% from the previous market peak, followed by a rebound that establishes a new, higher peak.1 Few publications or data providers publish, let alone highlight, full market cycle returns, yet we believe understanding them can help the return of your portfolio over the long-term.

      


  • Bank of America: Following Mohnish Pabrai's Recommendation on Banks

    Bank of America Corporation (NYSE:BAC) does not require a great introduction. The bank provides banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, large corporations, and governments worldwide.


    One of the largest shareholders of Bank of America is Mohnish Pabrai (Trades, Portfolio), who was selling off one-third of his stake (31%) on the fourth quarter to 3.15 million shares held as of the end of 2014. Buffett Disciple tells Barron's last year “that, if a bank has proper reserves and it’s trading well below tangible book value, that is an undervalued bank".

      


  • Steven Romick Buys 1 New Stock in First Quarter, Adds to 10 More

    Steven Romick (Trades, Portfolio) manages the Crescent Fund at First Pacific Advisers, a company with $33 billion in assets.


    A value manager, Romick wrote in his fourth-quarter letter to shareholders that the market was 50% pricier than it was a few years ago, which slowed his buying.

      


  • A Look At Steven Romick's Investment in Yahoo!

    Steven Romick (Trades, Portfolio) is the portfolio manager of FPA Crescent Fund. As of Jan. 31, the fund has delivered more than 11% a year in average returns over the past 10 years. His fund has about $2.8 billion under management. Romick's portfolio consists of equity positions of both long and short. He also has sizeable positions in short term bond and cash. He seeks value in all parts of a company's capital structure, including common and preferred stocks, as well as corporate and convertible bonds. The manager invests in securities "that the consensus does not wish to own," searching for stocks and convertible bonds that reflect low price/earnings ratios (P/Es) and trade at discounts to private market value. Corporate bonds with yields substantially higher than those of government securities are also considered.


    Last quarter, he initiated a long position in Yahoo! (NASDAQ:YHOO) by buying 3,409,200 shares. Yahoo's appears grossly undervalued. The company's stake in Alibaba (BABA) is worth ~$40 billion and Yahoo Japan is worth ~$7 billion. Yet Yahoo's market capitalization is just $42 billion, giving a negative value to its core business.

      


  • Analyzing Steven Romick's New Buys: Express Scripts (ESRX)

    Steven Romick (Trades, Portfolio) is the portfolio manager of FPA Crescent Fund. As of Jan. 31, the fund has delivered more than 11% a year in average over the past 10 years. His fund has about $2.8 billion under management. Romick's portfolio consists of equity positions of both long and short. He also has sizeable positions in short term bond and cash. He seeks value in all parts of a company's capital structure, including common and preferred stocks, as well as corporate and convertible bonds. The manager invests in securities "that the consensus does not wish to own," searching for stocks and convertible bonds that reflect low price/earnings ratios (P/Es) and trade at discounts to private market value. Corporate bonds with yields substantially higher than those of government securities are also considered.


    Last quarter, he initiated a long position in Express Scripts (NASDAQ:ESRX) by buying 4,234,000 shares. It was the fund's largest buy last quarter. Here's a look at the company in detail.

      


  • Steven Romick Comments on United Technologies Corp

    UTX (UTX) is an example of such a business. As part of our research process, we look at a number of companies and industries each year. As you can tell from the fund’s relatively low turnover, most of that research does not result in a purchase or sale. We regularly nix potential investments because we find them too expensive or too difficult to understand. When we pass on investments solely due to valuation, we are left with “on deck” opportunities. These are companies that the group has thoroughly researched but decided that the price wasn’t attractive enough to warrant purchase. We keep track of these companies and patiently wait for the day when they become available at a price that represents good, long-term value. UTX was one such opportunity that presented itself during the short-lived market dip last October.


    UTX is an industrial conglomerate with leading positions in aerospace systems, aerospace engines (Pratt & Whitney), helicopters (Sikorsky), elevators (Otis), climate control (Carrier) and fire/security systems. Each division is a leader in its respective field and features important long-term competitive advantages. UTX generates roughly 50% of its profits from aerospace and 50% from commercial buildings. The strength of the operating businesses has allowed UTX to earn an average return on invested capital in the mid 20’s through the recent economic cycle (i.e., the last 6 years).

      


  • Steven Romick's FPA Crescent Fund Fourth Quarter 2014 Commentary

    You should consider the Fund’s investment objectives, risks, and charges and expenses carefully before you invest. The Prospectus details the Fund's objective and policies, sales charges, and other matters of interest to the prospective investor. Please read this Prospectus carefully before investing. The Prospectus may be obtained by visiting the website at www.fpafunds.com, by email at [email protected], toll-free by calling 1- 800-982-4372 or by contacting the Fund in writing.


    Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. This data represents past performance and investors should understand that investment returns and principal values fluctuate, so that when you redeem your investment it may be worth more or less than its original cost. Current month-end performance data may be obtained by calling toll-free, 1-800-982-4372.

      


  • Fourth Quarter 2014 Crescent Fund Update

    Activity:


    o Sold out of Carefusion (CFN), Checkpoint Software, Johnson & Johnson (NYSE:JNJ) and Wellpoint. Trimmed CVS, Intel and Norsk Hydro.

      


  • Steven Romick's International Buys in Q4

    During the fourth quarter, Steven Romick (Trades, Portfolio) of FPA Crescent Fund purchased four new international stocks, bringing the total number of international positions to 19.


    The fund’s fact sheet states that about 65% of the portfolio’s assets are in the U.S., followed by 29.7% in Europe, and 3% in emerging markets.

      


  • Steven Romick Shorts Alibaba, Medtronic in Q4

    Steven Romick (Trades, Portfolio) is the portfolio manager of the long-short FPA Crescent Fund. During the fourth quarter, Romick shorted four additional positions, bringing the fund’s total number of short positions to 29.

    In a 2009 interview with Forbes, Romick said he views shorts as absolute opportunities.  


  • Steven Romick Buys 7 US and International Stocks in Q4

    Steven Romick (Trades, Portfolio), a value-minded investment manager of the FPA Crescent Fund (FPACX), found just as many attractive stocks outside the U.S. as within it in the fourth quarter.


    Romick purchased seven new holdings in total, according to his portfolio released Tuesday: Express Scripts (NASDAQ:ESRX), United Technologies Corp (NYSE:UTX), Carlsberg AS (OCSE:CARL B), Yahoo! Inc. (NASDAQ:YHOO), Sulzer AG (XSWX:SUN), Sberbank of Russia (LSE:SBER) and Sberbank of Russia (MIC:SBERP).

      


  • Battle of the Gurus: David Dreman Vs. Steven Romick

    Investors can learn about investing from examining the strategies used by the most successful investors in the world. Studying their past picks can help us understand what works and what does not work in investing. It is important to identify the mistakes of great investors too; this is how we learn without losing our own money. Today we examine Pitney Bowes, a 1-Star Business Predictability ranked provider of “mail processing equipment and integrated mail solutions.”


      


  • Steven Romick Buys One Stock in Q3, Headquartered in South Africa

    Steven Romick (Trades, Portfolio), manager of the FPA Crescent Fund, quieted down his stock purchasing in the third quarter, buying only one new stock after adding 10 new names to the portfolio in the second quarter.


    The FPA Crescent fund contains 64 stock positions in total and is valued at $9.8 billion.

      


  • Steven Romick Comments on Naspers And Tencent

    Naspers (JSE:NPN) is a South African holding company with a global portfolio of media and technology investments. Naspers has a 34% equity stake in Tencent (HKSE:00700), a Chinese internet company most known for its QQ instant messaging platform with over 800 million active users. The market values Naspers’s stake in Tencent at ~$48 billion but the parent company at just ~$45 billion. Going long Naspers and shorting a proportionate number of Tencent shares effectively allows us to create a Naspers “stub” at a negative $3 billion valuation. We feel Naspers is worth substantively more, even after tax-affecting for a disposition of Tencent. Better yet, at today’s prices the market is paying us to own Naspers ex-Tencent.


    The Naspers stub includes the leading South African Pay TV company MultiChoice, which has a more than 90% market share not to mention several Pay TV operations across Sub-Saharan Africa that have long-term subscriber growth potential resulting from increased Pay TV penetration. Naspers owns, as well, a major publisher of magazines and newspapers primarily sold in South Africa. The cash flow of these assets continues to support Naspers’s portfolio of Internet/e-commerce investments, including several companies focused on emerging markets that could prove valuable.

      


  • Steven Romick's FPA Crescent Fund Q3 2014 Commentary

    Dear Shareholders:


    The FPA Crescent Fund declined 0.96% in the third quarter but has risen 4.02% year-to-date. The S&P 500 returned 1.13% and 8.34% in the same periods, respectively. Our average risk exposure was 54.6% in the third quarter and 54.3% year-to-date.

      


  • Steven Romick's FPA Crescent Q3 Commentary

    Introduction Is the market finally correcting the recent excesses of stock valuations, particularly in the small-mid-cap area? The admittedly arbitrary definition of a stock market correction is when an index declines 10% or more from its recent level. Based on this, the Russell 2000 (R2000) recently fell into correction territory while the S&P 500 has declined 9% over the past month (as of 10/14/14). Moreover, the Russell Microcap Index is down more than 17% from its high earlier this year, with microcap technology stocks down nearly 25% since March. Thus, small-cap stock valuations, relative to large-cap valuations, are in the process of reverting back toward historical averages. In some ways, the smaller decline in the S&P 500 has masked the broader correction for a number of industry sectors. Besides those mentioned above, large-cap automotive stocks are down 18% since July, and energy stocks are also getting hit with the S&P Oil & Gas Exploration & Production index down 25% since this past summer. While your portfolio is not immune to this correction, we believe the companies we own have strong balance sheets, providing management teams an ability to take advantage of any good opportunities to buy assets on the cheap – should any opportunities present themselves. We have managed this strategy through a number of corrections and each time, while we take temporary hits to capital, we have been able to take advantage of opportunities that present themselves during these periods of dislocation. Our strategy’s three-decades of history shows that we can deploy capital very rapidly when valuations are depressed and when fear and uncertainty are high. On the other hand, we have exhibited tremendous patience in holding higher than normal levels of liquidity when valuations are rich. The last couple of years tested our patience, but we were fortunate to have discovered stocks that still met our stringent investment criteria and deployed some of your capital into these new investment opportunities. In recent weeks we deployed incremental capital as selling pressure accelerated. If the current volatility continues, we fully expect that we will be more aggressive in deploying your capital as valuations become even more attractive.


    Market Commentary

      


  • Logic Makes Steven Romick Skeptical Sometimes


    “Incompetence is the disease of idiots. Overconfidence is the mistake of experts. Incompetence irritates me. Overconfidence terrifies me.” – Canadian journalist Malcolm Gladwell

      


  • Steven Romick Increases Positions, Russian Oil Companies in Q3

    Manager of FPA Capital’s Crescent Fund Steven Romick (Trades, Portfolio) is skeptical of today’s market, as he explained in his shareholder letter and demonstrated in refusing to buy new stocks in the third quarter.  


  • TE Connectivity Is Going to Double Revenue Growth

    In this article, let's take a look at TE Connectivity Ltd (NYSE:TEL), a $24.74 billion market cap company, which is a company which designs, manufactures and markets engineered electronic components and network solutions for the automotive, appliances, aerospace and defense, telecommunications, computers and consumer electronics industries.


    Leading positions

      


  • Steven Romick Comments on Alcoa And Norsk Hydro

    We initiated positions in two aluminum companies last fall, Alcoa (AA) and Norsk Hydro (OSL:NHY), that we saw as commercial opportunities or, as we like to call them, “3 to 1s”, i.e., 3x the perceived upside to its downside. The oversimplified and bigger picture view was that we saw the price of aluminum was at an inflation-adjusted low and the stock prices of these companies were down in kind, as can be seen in the following graphs.


      


  • Steven Romick Comments on Jardine Matheson And Jardine Strategic

    Crescent Co-Portfolio Manager Mark Landecker profiled our investment in the “Jardines” at our FPA Investor Day. These Hong Kong-based holding companies can trace their roots back to 1832 and the founding family remains in control and continues to manage and shepherd the growth of these sister entities.


    About 80% of the value of our estimate of the net asset value (NAV) of the Jardines is comprised of the following listed companies: HK Land, Mandarin Oriental Hotels, Dairy Farm, Jardine Lloyd Thompson and Astra. We discussed the merits of the largest of these businesses at our recent Investor Day.

      


  • Steven Romick's Q2 FPA Crescent Fund Shareholder Letter

    Dear Shareholders:


    Nothing seems to slow this stock market in overdrive. The S&P 500 returned 5.23% in the second quarter and 7.14% year-to-date. The FPA Crescent Fund returned 2.94% and 5.04% for the same periods, albeit with an average net exposure to equities in the low 50% range.

      


  • Steven Romick Returns to Buying Stocks: Top 5 Purchases

    Famously patient and conservative investor Steven Romick (Trades, Portfolio) of the FPA Crescent Fund bought 12 new stocks in the second quarter after staying out of the game in the first. Central bank policies and few companies trading at low multiples, among other factors, nudged him to the sidelines in the first three months of the year.

    In his first-quarter letter, Romick told investors:  


  • Steven Romick's Top Five Stocks

    Steven Romick is the portfolio manager of First Pacific Advisors Crescent Fund. The fund’s investment objective and strategy reports that they “seek to generate equity-like returns over the long-term, take less risk than the market and avoid permanent impairment of capital.”


    Over the second quarter Romick purchased 12 new stocks and sold out of two. The guru’s portfolio currently holds 61 stocks valued at over $9.81 billion. The following five companies represent Romick’s top five stock holdings as of the close of the first quarter.

      


  • Weekly Guru Bargains Highlights: VOD

    According to GuruFocus updates, these stocks have declined the most since Gurus have bought.


    Vodafone Group PLC (NASDAQ:VOD): Down 49% Since Steven Romick (Trades, Portfolio) Bought In the Quarter Ended on 2013-12-31

      


  • Weekly Guru Bargains Highlights: VOD, EOG

    According to GuruFocus updates, these stocks have declined the most since Gurus have bought.


    Vodafone Group PLC (NASDAQ:VOD): Down 44% Since Steven Romick (Trades, Portfolio) Bought In the fourth quarter of 2013

      


  • Weekly Guru Bargains Highlights: EOG, VOD

    According to GuruFocus updates, these stocks have declined the most since Gurus have bought.


    EOG Resources Inc. (NYSE:EOG): Down 41% Since Ken Fisher (Trades, Portfolio) Bought In the Quarter Ended on 2014-03-31

      


  • Steven Romick's First Quarter 2014 Crescent Fund Letter to Investors

    We hope that investors will find FPA commentaries helpful to understand application of the same investment discipline in various markets, and can refer to particular items that interest them.


    You should consider the Fund's investment objectives, risks, and charges and expenses carefully before you invest. The Prospectus details the Fund's objective and policies, sales charges, and other matters of interest to the prospective investor. Please read this Prospectus carefully before investing. The Prospectus may be obtained by visiting the website at www.fpafunds.com, by email at [email protected], toll-free by calling 1- 800-982-4372 or by contacting the Fund in writing.

      


  • Weekly Guru Bargains Highlights: VOD, LNKD

    According to GuruFocus updates, these stocks have declined the most since Gurus have bought.


    Vodafone Group PLC (NAS:VOD): Down 47% Since Steven Romick (Trades, Portfolio) Bought in the Quarter Ended on 2013-12-31

      


  • Steven Romick's Top Five Highlight Technology Sector

    Steven Romick is the portfolio manager of First Pacific Advisors Crescent Fund. The fund’s investment objective and strategy reports that they “seek to generate equity-like returns over the long-term, take less risk than the market and avoid permanent impairment of capital.”


    Over the first quarter Romick purchased seven new stocks and sold out of six. The guru’s portfolio currently holds 53 stocks valued at over $8.552 billion. The following five companies represent Romick’s top five stock holdings as of the close of the first quarter.

      


  • Investor Steven Romick's Top 5 Increases of First Quarter

    FPA Crescent Fund’s Steven Romick (Trades, Portfolio) in the first quarter preferred to have cash ready to put to work in case volatility hit the markets, rather than buy new stocks. He believes a period of volatility – and the low-priced opportunities it would bring with it – could occur soon.

    “But, we are confident that there will be more volatility in our future and with it, investment opportunity. The CBOE Volatility Index13 (VIX) reflects a market estimate of future volatility. When compared to the last 24 years, at 12.87, the index is just 14% above its low; 36% below its average; and 71% below its high.14 If I were a betting man – and I am not – I would wager the index won’t end the year where it started.”  


  • Weekly Guru Bargains Highlights: VOD

    According to GuruFocus updates, these stocks have declined the most since Gurus have bought.



    Vodafone Group PLC (NAS:VOD): Down 48% Since Steven Romick (Trades, Portfolio) Bought In the Quarter Ended on 2013-12-31

      


  • Weekly Guru Bargains Highlights: VOD, LBTYA, CEO

    According to GuruFocus updates, these stocks have declined the most since Gurus have bought.


    Vodafone Group Plc (NASDAQ:VOD): Down 47% Since Steven Romick (Trades, Portfolio) Bought in the Quarter Ended on 2013-12-31

      


  • Weekly Guru Bargains Highlights: PBR.A, VOD, LBTYA

    According to GuruFocus updates, these stocks have declined the most since Gurus have bought.


    Petroleo Brasileiro SA Petrobras (NYSE:PBR.A): Down 31% Since Charles Brandes (Trades, Portfolio) Bought in the Quarter Ended on 2013-12-31

      


  • Steven Romick's Q4 Commentary for FPA Crescent Fund

    Dear Shareholders:


    Forgive us if we bring you up to date this year, in part, through the lens of the distant past.

      


  • Beacon Pointe's 2013 Spring Investment Forum with Steven Romick of FPA Capital



  • Steven Romick Buys 7 Stocks in Q4

    Steven Romick (Trades, Portfolio), of the FPA Crescent Fund, gradually increased his cash position over the first three quarters of 2013 as the market rose. From the end of 2012 to the end of the third quarter, Romick’s long equity exposure declined to 54.2% from 63.8%, and liquidity increased to 38.4%. He bought no new stocks during the third quarter.

    It appears that in the fourth quarter Romick found more attractive places to expend some of his accrued capital. He started seven new positions during the quarter, for a portfolio containing a total of 51 stocks and valued at $8.24 billion.  


  • Steven Romick’s Top Five Q4 Holdings

    Steven Romick is the portfolio manager of First Pacific Advisors Crescent Fund. The fund’s investment objective and strategy reports that they “seek to generate equity-like returns over the long-term, take less risk than the market and avoid permanent impairment of capital.”


     

      


  • Asset Allocation of Our Top Gurus - Are Gurus Moving Into Cash?

    In 2013, the year-to-date return for the stock market benchmark S&P 500 is 27.02%. The market hit historical record highs continually for months.

    In GMO's third quarter letter, Ben Inker used “Breaking News! U.S. Equity Market Overvalued!” as the title. In John Hussman’s commentary on Nov. 4, 2013, “Leash the Dogma,” he said he believed there is a largely unrecognized bubble in stock price. Wise man Howard Marks also pointed out that China’s equities are “tremendous bargains” while U.S. stocks are “fairly to fully valued in Shanghai on Nov. 4, 2013. You can reach my last market valuation article for more details.  


  • Steven Romick: We have found ourselves with little alternative but to make some sales

    FPA Crescent returned 3.78% in the third quarter, and 14.5% year-to-date compared with the S&P 500's returns of 5.24% and 19.79%, respectively.  


  • Steven Romick's FPA Crescent Fund Q3 Commentary

    We hope that investors will find FPA commentaries helpful to understand application of the same investment discipline in various markets, and can refer to particular items that interest them.

    You should consider the Fund's investment objectives, risks, and charges and expenses carefully before you invest. The Prospectus details the Fund's objective and policies, sales charges, and other matters of interest to the prospective investor. Please read this Prospectus carefully before investing. The Prospectus may be obtained by visiting the website at www.fpafunds.com, by email at [email protected], toll-free by calling 1-800-982-4372 or by contacting the Fund in writing.  


  • Steven Romick of the FPA Crescent Fund’s Top Five Stocks

    Steven Romick is the portfolio manager of First Pacific Advisors Crescent Fund. The fund’s investment objective and strategy reports that they “seek to generate equity-like returns over the long-term, take less risk than the market and avoid permanent impairment of capital.”

    Over the third quarter Romick kept pretty quiet, buying no new stocks and selling out of three. The guru’s portfolio currently holds 53 stocks valued at over $6.9 billion. The following five companies represent Romick’s top five stock holdings as of the close of the third quarter.  


  • Steven Romick’s Third Quarter Sells at FPA Crescent Fund

    The third quarter portfolio update of the FPA Crescent Fund, led by Guru Steven Romick of First Pacific Advisors, lists 53 stocks. The fund’s total value is $6.9 billion, with a quarter-over-quarter turnover of 4%. The portfolio is currently weighted with top three sectors: financial services at 19.6%, consumer defensive at 17% and healthcare at 16%. Steven Romick has averaged a return of 16.52% over 12 months; First Pacific Advisors is averaging 18.84%.

    In the third quarter of 2013, Romick reduced 11 positions and sold out three holdings. Here’s a review of his four highest-impact sells in the third quarter of 2013:  


  • Steven Romick Makes Major Increases to 3 Holdings

    With the S&P 500 index this week surpassing a 20% gain for the year, investors focused on price are making notably limited new purchases. One such value investor, Steven Romick, reported today buying no new stocks during the third quarter, though he made increases to existing holdings.

    Romick discussed in his second quarter letter how he viewed the market as artificially inflated due to quantitative easing, and not as a natural result of improving earnings among businesses. In fact, for the first half of the year, GAAP earnings for the S&P 500 declined one half of one percent compared to the comparable period last year. FactSet research also indicated that 80% of corporate EPS guidance for the second quarter was negative. Romick wrote:  


  • FPA Crescent Fund Q2 2013 Webcast Transcript



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