Steven Romick

Steven Romick

Last Update: 04-16-2015
Related: First Pacific Advisors
Robert Rodriguez

Number of Stocks: 65
Number of New Stocks: 1

Total Value: $10,256 Mil
Q/Q Turnover: 5%

Details: Top Buys | Top Sales | Top Holdings  Embed:

Steven Romick Watch

  • Steven Romick Comments on Orkla

    Norway-based Orkla (PINK:ORKLY) has all the characteristics of a classic Contrarian special situation with a catalyst. At the time of our purchase, the company was viewed as an unwieldy conglomerate with activities in branded consumer goods (think a Scandinavia-focused Unilever), hydro power, aluminum industrial products (SAPA), specialty chemicals (Borregaard), solar (REC), and a significant minority interest in a privately-held paints and coatings business (Jotun). As if the aforementioned smorgasbord of activities was not sufficiently complex to discourage analysis, Orkla also had a portfolio of publicly traded securities and a collection of Scandinavian real estate investments.

    Our interest in the name was piqued by a publicly announced plan to reduce the ‘diworsification’19 activities and refocus primarily on the branded consumer goods business. Despite being buried in what had been widely regarded as a poorly run conglomerate, the branded goods businesses has a history of maintaining long-standing, best-in-class brands and has shown that it can develop successful new products. Although Orkla lacks global brands, about 80% of sales are in the Nordic region, roughly 80% of sales come from products with #1 market positions, and about 70% of sales come from its ten largest product categories.  

  • Steven Romick Comments on Groupe Bruxelles Lambert

    Groupe Bruxelles Lambert (GBL)(EBR:GBLB) is a Belgian holding company run by Albert Frere, a man widely referred to as the ‘Warren Buffett of Europe.’ The company owns significant stakes in a variety of established companies including Total (energy), Lafarge (cement), Pernod (alcoholic spirits), and GDF Suez (utility). Though the various underlying companies all have leverage of varying degrees, the holding company is essentially debt free, allowing for a simple sum of the parts evaluation.

    Our attraction to GBL was not just the 25-30% discount to NAV at which the shares have traded, but also that the various parts of the company were generally out of favor and relatively inexpensive at low double digit earnings multiples. By purchasing a collection of inexpensive companies via a holding company trading at less than NAV, we viewed ourselves as effectively taking advantage of a double discount.  

  • Steve Romick Crescent Fund - Q4 2012 Shareholder Letter

  • The Top Companies Steven Romick Is Shorting

    Steven Romick, who manages the FPA Crescent Fund at $20 billion First Pacific Advisors, is one of the few investors who discloses his short positions. As a value investor, Romick researches for stocks that are trading at discounts and usually in out-of-favor industries, with an eye to the macro environment. Romick just updated his fourth quarter portfolio. The biggest portfolio stocks he is expecting to move downward are: Express Scripts (ESRX), AvalonBay Communities (AVB) and Essex Property Trust (ESS).

    Express Scripts (ESRX)  

  • Steven Romick’s Top Growth Predictable Stocks

    As the co-managing partner of Los Angeles-based First Pacific Advisors LLC, Steven Romick heads the firm’s Crescent Fund, through a contrarian value strategy. Romick has helped deliver about 125 percent cumulative return over the last 10 years, beating the S&P 500 by a long shot.

    A former GuruFocus premium member, he is the ultimate bottom-up, absolute value investor with a long-term focus, relying on price and focusing on the macro economy to drive his valuations.  

  • Steven Romick Adds to Microsoft, AIG and Interpublic Group

    Of the $20 billion FPA Capital has in assets under management, Steven Romick manages $9.9 billion in its Crescent Fund, none of which he saw fit to invest in new stocks for the second consecutive quarter. The contrarian value investor instead added the most to Interpublic Group (IPG), Microsoft Corp. (MSFT) and American International Group Inc. (AIG).

    His large cash holding right now, however, indicates he is not finding anything new that is attractively priced. Romick described his investing philosophy in his October interview with GuruFocus: “Well, we are primarily bottoms-up analysts,” he said. “If a business is cheap or an asset trades at a discount we’re interested. But we always have an eye to protecting capital. That’s where our macro considerations come in.”  

  • FPA Capital Fund Inc. Quarterly Commentary

    After underperforming the first two quarters of the year, your portfolio outperformed its benchmarks in the third quarter of 2012. However, the performance still lags the benchmark on a year-to-date basis. The fund’s elevated cash level has contributed roughly 250 basis points of performance drag thus far in 2012, but our absolute value strategy necessitates that we hold cash when there is a dearth of value in the markets we follow.

    We have articulated many times over the last couple of decades that cash is a residual of investment opportunity, and we do not target a certain percentage. That is, cash levels are low when there is an abundance of value and high when there is a scarcity of absolute value opportunities. We think of cash as an asset that has no duration, but provides an embedded call option that can be exercised when quality assets are cheap and on sale.  

  • Steve Romick Comments on Ensco

    Ensco (ESV)10 Whereas Walmart is an example of a type of "compounder" we like to buy, Ensco is an example of a "3:1" - a purchase we make when we believe the potential upside is 3x larger than the potential downside. We haveowned Ensco for a number of years, and it has also been discussed in the past, along with our investments in other oil service companies. 11 Ensco is an average business with no long-term competitive advantages. It seems that to effectively compete, a rig company only requires capital and a contract with an Asian shipyard. Such ease of market entry convinces us that a company that builds a rig and then leases it should not expect to earn more than a 10% to 12% long-term return on capital. In a tight market, demand exceeds the number of rigs available, and return on capital rises above the long-term average. At such times, one generally expects to see new orders for rigs. As those rigs come to market a few years down the road, day rates, and thus returns on capital, decline.

    Earnings at Ensco and other oil service companies are currently above our expectations for normal returns on capital due to a shortage of available rigs. Capital and time will correct that. Currently, there are lots of rigs under construction. In 2013, 35 new jackup rigs will be built and delivered, an increase of 8% to the current worldwide fleet of 426. Additionally, 21 new floater rigs will be built and delivered, an increase of 7%  

  • Steve Romick Comments on Walmart

    Walmart: Walmart's earnings met or exceeded expectations in the last year a nd concerns about its ability to grow dissipated, triggering renewed investor interest in the company. Not much changed in Walmart's fundamentals, but the stock price and P/E 2 moved higher. With our investment having exceeded our return expectations and greater downside risk accompanying the higher stock price, we scaled back our stake. We'll use Walmart to illustrate how an investment can come full circle – from buy to sell. Our original thesis, laidout in our 2010 Q4 commentary, is reprinted below.

    Walmart (WMT) seems anomalous in a world where stocks have rebounded so dramatically from the stock market's 2009 bottom. Walmart's stock averaged $48.59 in February 2009…. At that price, it traded at a TTM 3 and Forward P/E 4 of 14.5 and 13.0x, respectively. Walmart closed 2010 at $53.93 per share – more dear in price but cheaper in valuation – trading at a lower TTM and Forward P/E of 13.3 and 12.1x, respectively.  

  • Steven Romick Owns French Car Maker Renault, Shorts Nissan and Volvo

    In an interview on WealthTrack with Consuelo Mack, FPA Capital’s Steven Romick put forth a complex play on the auto industry and European crisis: buying long Renault (RNO_FP) shares and shorting Volvo (VOLVY) and Nissan (NSANF). The positioning, he said, is resulting in him getting paid to own Renault.

    Renault interested Romick because it was associated with two of his favorite criteria – an out-of-favor industry and lots of bad news. The auto industry has suffered, but Renault, an auto manufacturer, is based in France, where new car registrations declined 13.8% from January to September 2012 compared to the same period of 2011. More broadly, in the EU, the new car market contracted by 7.6%.  

  • Steven Romick on WealthTrack

    Steven Romick on WealthTrack: On this week’s Consuelo Mack WealthTrack, a rare interview with Great Investor, Steven Romick of FPA Crescent Fund. Romick describes how he is keeping his five-star rated fund on top by balancing the forces of inflation and deflation and continuing his contrarian, value-oriented strategies.

    FPA Crescent Fund; 10-year averaged 9.85%.  

  • Steven Romick Buys Analog Devices, Adds to IPG, AIG and ORCL in Third Quarter

    Portfolio manager of the FPA Crescent Fund and Contrarian Value Strategy at First Pacific Advisors, Steven Romick, added one new domestic stock to his portfolio in the third quarter: Analog Devices Inc. (ADI). The largest additions to the 10 holdings he increased are: Interpublic Group of Companies Inc. (IPG), American International Group Inc. (AIG) and Oracle Corp. (ORCL).

    Romick’s diversified, risk-averse FPA Crescent Fund gained almost 20% over the 12 months ending June 30, 2012. He continues to employ his bottom-up value strategy of buying cheap, typically out-of-favor assets at discounts that would prevent permanent impairment of capital, which he discusses in his October GuruFocus interview.  

  • Steven Romick’s Latest Sells as of 9/30/2012

    As FPA Crescent Fund’s portfolio manager, investment Guru Steve Romick has made updates to his portfolio picks for the end of the third quarter. Below are the four companies of which he made stock reductions.

    PetSmart Inc. (PETM)  

  • Interview with Steve Romick, Portfolio Manager of FPA Crescent

    GuruFocus readers recently got to ask Steve Romick, FPA Crescent portfolio manager, their questions about investing. Romick's mutual fund FPA Crescent Fund is up 19.76% over the last year and has delivered an annualized return exceeding 9% over the last decade. His fund is slightly different from most mutual funds in that it is diversified across a different basket of asset classes to provide equity rates of return with less risk.

    Here are Steve Romick's answers to readers' questions:  

  • Steven Romick on Stock Picks, Bonds and Farmland

    Steve Romick of First Pacific Advisors discusses his investment procedure on CNBC. Romick has a diverse variety of investments in his portfolio, including corporate bonds, stocks and farmland. His favorite picks are Renault (EPA:RNO), Omnicare (OCR) and Rhino Resource Partners (RNO). He is short Volvo and Nissan.


  • Q&A with Investor Steven Romick of FPA Funds

    Top investor Steven Romick will join GuruFocus for an interview this month. You can ask him a question related to investing by leaving it as a comment below. GuruFocus will receive his answers via a phone interview in the next several weeks.

    About Steve  

  • Stocks Owned by Both FPA Capital Fund and FPA Crescent Fund

    FPA family of funds have built impressive track records. Among the two stock funds in the family, FPA Capital Fund has been run by the legendary Robert Rodriguez, and FPA Crescent Fund by Steven Romick. FPA Capital Fund has averaged 14.45% since inception in 1984. FPA Crescent Fund has gained 10.6% a year since inception in 1993.

    A major difference of FPA funds from other value shops is the FPA funds does put quite a lot research to macroeconomic picture, and they are very good at it. They predicted the housing price collapse and financial crisis well before crisis hit, and they were prepared by avoiding financials. Currently they are weighted in energy stocks as they think that over long term, oil will be more expensive and do well.  

  • The Stocks Steven Romick Keeps Buying

    Steven Romick is a strict bottom-up investor who does not neglect the macro picture. In the second quarter he finds stocks neither particularly cheap nor particularly expensive, according to his second-quarter commentary on his FPA Crescent Fund. He believes that Central Bankers are leading the world to inflation where his stocks should at least perform “nominally well,” but says, “If a business or asset is good and cheap – absolutely, not relatively – we'll buy it.”

    These are the stocks the fund manager keeps buying: Aon (AON), Cisco (CSCO), WellPoint (WLP) and Walmart (WMT).  

  • Crescent Fund's Steven Romick Comments on CareFusion

    From the second quarter commentary of Crescent Fund's Steven Romick:

    CareFusion We recently made an investment in CareFusion (CFN), a leading medical technology company serving hospitals in the United States and abroad. In this country, it has dominant market positions in a majority of its businesses. CFN's products and services are particularly attractive because they help lower hospitals' operating costs. With new, highly motivated and experienced management at the helm, we believe CFN could improve its R&D productivity and grow international sales at a faster rate. This should translate into better long-term EPS growth. Management's actions to date should increase the company's operating margin to a level more commensurate with its strong share position and in line with similarly positioned medical device companies. The company is trading at ~10x cash earnings and it has minimal net debt leverage, so we find CFN to be an attractive investment.  

  • Steven Romick FPA Crescent Fund Quarterly Commentary

    FPA Crescent declined 2.9% in the second quarter amidst global market weakness, but increased 3.5% for the first half. We continue to maintain our conservative posture given our cautious outlook that we lay out in the commentary below.

    The top individual contributors and detractors from our quarterly performance are as follows:  

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User Comments

ReplyKeithlevy1234 - 10 months ago
No its a pair trade he did.
ReplyJoeDaWealthManager - 1 year ago
Why short VZ? Is it a race to the bottom on price plans?

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