Chuck Royce's Portfolio Update
Schweitzer-Mauduit International (SWM)
Royce increased his holdings in Schweitzer-Mauduit 85.1% on June 30. The guru bought a total of 1,043,322 shares at an average price of $49.88. Since his buy, the price per-share has increased approximately 2%.
Royce’s holdings as of the first quarter:
Since his most recent buy Royce now owns a total of 2,269,322 shares of SWM, representing 7.23% of the company’s shares outstanding.
Schweitzer-Mauduit is the largest producer of cigarette papers in the world. Their estimated worldwide share of the cigarette paper market is 36%, excluding China which is largely self-sufficient. The company manufactures and sells paper and reconstituted tobacco products to the tobacco industry as well as specialized paper products for use in other applications.
The company’s first quarter results highlighted the following:
· Net sales of $194.5 million, compared to $195.0 million in the same quarter 2012.
· Adjusted income per share from continuing operations of $43.3 million versus $43.9 in the prior-year quarter
· Adjusted EBITDA of $53.9 million, compared to $54.5 million in the first quarter 2012.
Schweitzer-Mauduit’s historical price, revenue and net income:
The analysis on the company reports:
· The operating margin is continually expanding.
· The dividend yield is close to a 3-year high.
· The revenue has been in decline this past year.
· The stock price is close to a 10-year high of $50.23.
· The P/B and P/S ratios are near 10-year highs.
· The company has issued $120.8 million of debt in the past three years.
The Peter Lynch Valuation Chart shows that SWM appears to be overvalued:
Schweitzer-Mauduit has a market cap of $1.59 billion; its shares were traded at around $51.64 with a P/E ratio of 16.50 and a P/S ratio of 2.00. The dividend yield for Schweitzer-Mauduit is at 1.80%. The company had an annual average earnings growth of 10.1% over the past 10 years.
Dorman Products (DORM)
Chuck Royce decreased his holdings in Dorman Products on June 30 by 26.31%. The guru sold a total of 689,942 shares at an average price of $45.63 per share. Since his sell, the price per share has gone up approximately 1%. Royce now owns 1,932,443 shares of Dorman, representing 5.3% of the company’s shares outstanding.
Royce’s holding history as of the end of the first quarter:
The company is a supplier of automotive replacement parts and fasteners and service line products mainly for the automotive aftermarket. It markets approximately 128,000 different automotive replacement parts, fasteners and service line products.
Dorman Products’ historical price, revenue and net income:
The analysis on Dorman reports:
· The company has no debt.
· It has shown predictable revenue and earnings growth.
· The operating margin is expanding.
· The price is at a 10-year high.
· The P/E, P/B and P/S ratios are at 10-year highs.
The Peter Lynch Chart shows that Dorman currently appears to be overvalued:
Dorman Products has a market cap of $1.69 billion; its shares were traded at around $46.10 with a P/E ratio of 24.20 and a P/S ratio of 2.90. The company had an annual average earnings growth of 16.2% over the past 10 years. GuruFocus rated the company the business predictability rank of 3.5-star.
Silvercrest Asset Management Group (SAMG)
Chuck Royce made his initial buy into Silvercrest this past week as the asset management group finalized their IPO. The company announced that their public offering of 4.79 million shares of common stock would be priced at $11 per share.
Royce bought a total of 550,000 shares at an average price of $12 per share. Since his buy, the price has dropped approximately 2%.
All five IPOs that priced on Wednesday had to slash their valuations in order to complete their offerings, as last week’s sell-off and concerns over market volatility forced companies to offer shares below their original ranges. Wednesday had the most IPOs price below their original range in a single day since June 9, 1998.
Silvercrest Asset Management Group is an independent, employee-owned, registered investment advisor which provides asset management and family office services to families and select institutional investors.
Silvercrest Asset Management Group has a market cap of $140.4 million; its shares were traded at around $11.73 with a P/S ratio of 2.50.
Royce also made his first buy into Truett-Hurst on June 30, after the company closed its IPO on June 25. The company sold 2,700,000 shares of its Class A common stock at a price to the public of $6 per share.
Royce bought a total of 330,000 shares at an average price of $5.90 per share. The price is now down about 3%.
Truett-Hurst is a super-premium and ultra-premium wine sales, marketing and production company based out of the Dry Creek and Russian River Valleys of Sonoma County, Calif. Truett is oftentimes recognized for their work in private label development as well as Truett-Hurst, VML, Bradford Mountain and Healdsburg Ranches brands.
Truett-Hurst has a market cap of $15 million; its shares were traded at around $5.70 with a P/S ratio of 1.10.
Chuck Royce is currently the only guru that holds a stake in both Truett-Hurst and Silvercrest Asset Management.
You can view Chuck Royce’s current portfolio here. Also, check out his undervalued stocks, top growth companies and high yielding stocks.