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The Royce Funds Makes Moves on Some Tech Stocks

December 07, 2012 | About:
As of Nov. 30, New York-based Royce Funds, headed by small-cap value investor, Chuck Royce, has reported six trades, four of them from the technology sector. The two other non-tech stocks were plastic products producer Spartech Corp. (SEH) and pharmaceutical company Hi-Tech Pharmacal Co. Inc. (HITK). Both stocks have gained points for the moment’s trading and are ranked one star in Business Predictability.

Earlier this month, Royce Funds portfolio manager, Chip Skinner released commentary about the year-to-date results of Royce Value Plus Fund, whose largest sector weighting at the end of the third quarter ended up to be information technology. In the commentary, Skinner revealed some of his insight about the sector:

“The Fund is overweight in Information Technology. The sector has so far not made a significant contribution to 2012 performance, mostly due to the portfolio's large exposure to the inexpensive semiconductor segment and less exposure to more high-flying enterprise software businesses. I've reduced the Fund's weighting in semiconductors somewhat, as the global economy has really weighed on that group's valuation and recovery prospects, though I suspect that a stronger economy in the back half of 2013 would be good news for this group. I've also been adding names in the enterprise software group.”

While the Royce Value Plus Fund was drenched in tech stocks in the third quarter, Chuck Royce’s overall sector weightings still has Industrials in the lead, making up the majority of his 1,401 stock portfolio. (See sector weighting)

In Royce’s most recent trades, the four out of six stocks that belonged to the tech sector were: Intelliquent (IQNT), DTS Inc. (DTSI), Rimage Corp. (RIMG) and FARO Technologies Inc. (FARO). Below are their descriptions.



Intelliquent (IQNT)


After reducing his stake in Intelliquent by 59.17 percent, Royce’s position in the company totals 868,210 shares. In the third quarter, he had more than 2.1 million shares of the company.

Headquartered in Chicago, Intelliquent is a provider of voice and data services worldwide. Some of its services include voice, IP Transit and Ethernet solutions to major carriers, service providers and content management firms. It is the largest global Ethernet provider, with 130 Ethernet sites across 80 countries.

Intelliquent stock has been down 2.97 percent for the afternoon’s trading, priced at $2.29 per share. After several months of trading between the range of $10 to $13, the stock started to drop in the beginning of August. Year to date, the company has lost 74 percent of its market value.

1354907677996.pngIQNT data by GuruFocus.com

View its 10-Year Financials here.



DTS Inc. (DTSI)


Royce added to his DTS Inc. stake by 44.85 percent. After the purchase, Royce ended with 1,706,229 shares. He reported about 1.2 million shares in the third quarter.

With a market cap of $286.2 million, DTS Inc. is a company that provides audio technology to billions of consumer electronic products worldwide. Headquartered in California, It currently has a mandatory audio format in the Blue-ray Disc standard and enables digital delivery of movies, music, games and other forms of digital entertainment.

Its stock is currently down almost 3 percent, trading at $15.22 per share, nearing its three-year low. Year to date, its stock has decreased in price by 43.91 percent. Its highest price this year was in May around $31.

1354908446623.pngDTSI data by GuruFocus.com

View its 10-Year Financials here.



Rimage Corp. (RIMG)


Royce reduced his position in Rimage Corp. by 78.68 percent, ending with 232,200 shares, while he had over 1 million shares in the third quarter.

With a market cap of $68.9 million, Rimage is in the business of helping companies deliver digital content to their employees, customers and partners. Under Rimage are several entities such as Qumu and Signal, as well as branded CD, DVD and Blu-ray Discs, covering the publishing of content for video communications and mobile devices. Rimage’s clients are found in North America, Europe and Asia.

Rimage is currently trading at $6.88; its stock up 2 percent for the moment’s trading. The stock is trading near its five-year low. Year to date, its stock has depreciated 38.5 percent. It has a dividend yield of 9.9 percent.

1354909343594.pngRIMG data by GuruFocus.com

View its 10-Year Financials here.



FARO Technologies Inc. (FARO)


Royce added to his stake in FARO Technologies by 74.89 percent. Reporting only 839,231 shares in the third quarter, Royce now has 1,467,731 shares after the purchase.

Described by Royce Fund’s Skinner as “a conservatively capitalized company that makes robotic measurement arms and scanning equipment,” FARO specializes in 3D measurement technology, developing computer-aided measurement and imaging devices and software. Its technology permits development of high-precision components and assemblies, used for many things such as surveying, construction and investigation as well as reconstruction of accident sites or crime scenes.

With a market cap of $598.8 million, FARO is trading at $34.98 per share. Its stock is currently up 0.55 percent. It is trading close to its one year low. It once traded about $58 in February of this year. Year to date, the stock has lost 23.39 percent of its value.

1354910135070.pngFARO data by GuruFocus.com

View its 10-Year Financials here.

To read more about Royce & Associates, view GuruFocus’ Archives of articles.

About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website


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