David Nierenberg (Trades, Portfolio), who manages the D3 Family of Funds, revealed earlier this week he slashed his position in Geospace Technologies Corp. (GEOS, Financial) by 43.62%.
The guru’s Camas, Washington-based firm typically invests in a concentrated number of undervalued, domestic, micro-cap growth stocks. He is known to take activist positions in some circumstances.
According to GuruFocus Real-Time Picks, a Premium feature, Nierenberg sold 305,872 shares of the Houston-based company on Dec. 31, bringing his total holding to 395,334 shares. The stock traded for an average per-share price of $16.77.
GuruFocus estimates Nierenberg has gained 6.36% on the investment since establishing it in the second quarter of 2015.
The company, which develops and manufactures instruments and equipment used by oil and gas producers to collect seismic data to locate, assess and monitor hydrocarbon-producing reservoirs, has a $203.83 million market cap; its shares were trading around $14.92 on Wednesday with a price-book ratio of 1.14 and a price-sales ratio of 2.09.
In November, the company reported fourth-quarter and full-year 2019 financial results. It posted quarterly earnings of 63 cents per share on $28.9 million in revenue, which was a 40% increase from the year-ago quarter.
For the full fiscal year, revenue grew 26% from the prior year to $95.8 million, while the net loss narrowed to $146,000, or 1 cent per share, from $19.2 million, or $1.45 per share, in 2018.
Supported by no long-term debt and comfortable interest coverage, Geospace’s financial strength was rated 8 out of 10 by GuruFocus. In addition, the robust Altman Z-Score of 6.87 suggests the company is in good standing financially even though its revenue per share has been in decline for the past five years.
The company’s profitability did not fare as well, scoring a 4 out of 10 rating on the back of negative margins and returns that underperform over half of its competitors. The high Piotroski F-Score of 7, however, indicates it has healthy operating conditions. Geospace also has a business predictability rank of one out of five stars. GuruFocus says companies with this rank typically see their stocks gain an average of 1.1% per annum over a 10-year period.
Nierenberg is still the company’s largest guru shareholder with 2.89% of outstanding shares. Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Jeremy Grantham (Trades, Portfolio) and Chuck Royce (Trades, Portfolio) also have positions in the stock.
Portfolio composition
The investor’s $69 million equity portfolio, which is composed of eight stocks, is largely invested in the technology sector, followed by smaller positions in the energy, consumer cyclical and industrials spaces.
Another oil and gas services company he holds is Flotek Industries Inc. (FTK, Financial), where he is on the board of directors.
Disclosure: No positions.
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