Rodriguez generally focuses on small companies. He selects his investments based on balance sheet strength, free cash flow and business strategy.
His purchases are concentrated in companies with relatively low price/normalized earnings, low price/pretax cash flow, low price/book value, low price/replacement value and low market cap/total revenues.
He sells a stake when the stock is selling at a premium P/E to the market, when he has recovered profitability or the company's management team has done something wrong.
His portfolio includes between 24 and 45 equities.
Before joining FPA, Rodriguez served as a senior portfolio manager in the Chairman's department of Kaufman & Broad Inc., and portfolio manager at Transamerica Investment Services Inc.
I found some stocks in his portfolio that are currently undervalued in GuruFocus' valuation scan and also have a very low P/E:
Veeco Instruments Inc. (NASDAQ:VECO): P/E of 4.5
Veeco designs, manufactures, markets and services a broad line of precision beam etching and surface measurement systems used in the manufacture of microelectronic products. Its customers include semiconductor and data storage manufacturers.
Veeco is a leading supplier and holds almost 60% of the market. The trading of disk drives is surging as there is an increasing demand for units that are used in consumer electronic devices, such as mobile phones and Apple iPods.
Avnet Inc. (NYSE:AVT): P/E of 7.95
Avnet Inc. is one of the world's largest industrial distributors of electronic components and computer products. The company markets, distributes and optimizes the supply-chain and provides design-chain services for the products of the world's leading electronic component suppliers, enterprise computer manufacturers and embedded subsystem providers.
AVNET has a particular feature that enables it to acquire companies and integrate them into its business. This ability has significantly increased sales and profitability in recent years.
Recently, Avnet acquired Access Distribution. This acquisition will certainly improve AVNET's presence in the IT market.
Avnet has been able to maintain its market positions despite the increase in competition. Indeed, this ability is boosted by the products and services it offers, its solid inventory and the strong customer relationships it has been able to build.
In terms of future expectations, the company will keep a solid top-line growth. Furthermore, management's strong acquisition policy will enable the company to geographically expand.
The acquisitions of Bell Micro and Tallard will firmly establish Avnet as a leading value-added IT distributor in the fast-growing Latin American region.
Regarding shareholders, directors recently approved a share repurchase program of $500 million.
Arrow Electronics Inc. (NYSE:ARW): P/E of 8
Arrow Electronics Inc. is the world's largest distributor of electronic components and computer products to industrial and commercial customers. The company is a major global provider of products, services and solutions to industrial and commercial users of electronic components and computer products.
ARW is trying to increase its footprint in Asia given the rapid growing market. Recent acquisitions have strengthened its presence in the region and are representing a higher revenue percentage.
OSHKOSH CORP (NYSE:OSK): P/E of 8
Oshkosh Corporation is a leading designer, manufacturer and marketer of a broad range of specialty access equipment, commercial, fire & emergency and military vehicles and vehicle bodies. The brands through which the company operates include Oshkosh, JLG, Pierce, McNeilus, Medtec, Jerr-Dan, BAI, Oshkosh Specialty Vehicles, Frontline, SMIT, Geesink, Norba, Kiggen, Con-E-Co, London and IMT.
The company has an unsuccessful MRAP attempt. Nevertheless, it has been able to enter a M-ATV agreement with the government, which provided around $6 billion in revenue.
Western Digital (NASDAQ:WDC): P/E of 10
Western Digital is the second largest manufacturer of hard disk drives in the U.S. The company is well managed and has good technical capabilities.
Most importantly, it has undergone significant growth thanks to the increasing demand for desktop drives, more market share and growth in other hard drive products, especially in the mobile and consumer electronics markets.
WDC has extremely surpassed competitors thanks to its low operating expense levels. Furthermore, it has carried out important acquisitions. It acquired Hitachi, giving it more presence in the market. In 2010, it completed the acquisition of Hoya Corporation and Hoya Magnetics Singapore PTE Ltd. In 2009, it acquired Silicon Systems Inc.
All of them increased the company's presence in the market.
In terms of revenue, most is generated outside the US. Asia is the largest contributor thereof. Indeed in 2011, it contributed with 54% of revenue.
In terms of future expectations, despite a reduction in spending, the company will do well. To maintain its position, the company decided to increase investments in research and development. Actually it has increased the rate in more than 11%
The company has a rich product portfolio consisting of hard disk drives ranging from 20
Giga Byte (GB) to 250GB and with rotational speeds ranging between 5,400-7,200 revolutions per minute (RPM).
Digital will enhance WDC's geographic penetration across market segments. The positive cash flow generation inspires confidence in the company s ability to execute successfully in a difficult economic environment.
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