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Chuck Royce Reductions – Lessons on Hold’em or Fold’em

September 10, 2013 | About:
Sally Jones

Sally Jones

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If investors are to learn by example of the billionaire gurus, Chuck Royce’s trades offer a valuable lesson in “when to hold’em and when to fold’em." As the king of small caps, Royce has a strategy that’s definitely working, with an average return of 19.78% over 12 months. His 12-month average is higher than 64 other billionaire investors.

In a recent update, billionaire Chuck Royce of Royce & Associates lists 149 new stocks and manages 1,438 stocks in total, a portfolio valued at $32.37 billion. His quarter-over-quarter turnover rate is 6%, according to the GuruFocus update of Sept. 6, 2013.

Guru Royce has made some high-impact reductions recently. His top four reductions all share trading histories characterized by long green streaks of gains:

Hi-Tech Pharmacal Co. Inc. (HITK): Reduced Impacts Portfolio: -0.22%

Up 37% over 12 months, Hi-Tech Pharmacal Co. Inc. has a market cap of $585.5 million; its shares were traded at around $43.15 with a P/E ratio of 36.20.

Hi-Tech Pharmacal Co. Inc. is a specialty pharmaceutical company that develops, manufactures and markets generic, branded prescription and other products.

Guru Action: As of Aug. 31, 2013, Chuck Royce reduced his position by 99.96%, reducing his holding down to 700 shares. Over a five-year history, he has averaged a gain of 31% on 1,206,525 shares bought at an average price of $32.79, as of June 30, 2013. On shares sold, he has averaged a gain of 204% on 169,730 shares sold at an average price of $14.17, as of June 30, 2013.

His holding history is a remarkable record of pure gains for five years.



Track historical pricing, revenue and net income:



Littelfuse Inc. (LFUS): Reduced

Impacts Portfolio: -0.09%

Up 45% over 12 months, Littelfuse Inc. has a market cap of $1.65 billion; its shares were traded at around $77.66 with a P/E ratio of 23.90.

Founded in 1927, Littelfuse Inc. designs, manufactures, and sells circuit protection devices used in the automotive, electronics and electrical markets.

Guru Action: As of August 31, 2013, Chuck Royce reduced his position by 18.73%, reducing his holding down to current shares of 1,719,576. He now holds 7.68% of shares outstanding. Over a five-year history, he has averaged a gain of 83% on 3,912,386 shares bought at an average price of $42.43, as of June 30, 2013. On shares sold, he has averaged a gain of 35% on 1,926,526 shares sold at an average price of $57.33, as of June 30, 2013.

In another remarkable trading history of pure gains, Royce’s highest gains of 494.2% and 371.5% were in the first and second quarters of 2009, respectively.

LFUS is held by 12 gurus.

Track historical pricing, revenue and net income:



AZZ Inc. (AZZ): Reduced

Impacts Portfolio: -0.08%

Up 21% over 12 months, AZZ Inc. has a market cap of $956.47 million; its shares were traded at around $40.30 with a P/E ratio of 17.40.

Established in 1956, AZZ Inc. is an electrical equipment and components manufacturer. The company serves global markets in power generation, transmission and distribution, as well as general industrial markets nationwide, offering galvanizing services to the steel fabrication market.

Guru Action: As of Aug. 31, 2013, Chuck Royce reduced out his position by 45.42%, reducing his holding to current shares of 752,860. He now holds 2.95% of shares outstanding. Over a five-year history, he has averaged a gain of 98% on 2,664,616 shares bought at an average price of $20.39, as of June 30, 2013. On shares sold, he has averaged a gain of 6% on 1,293,324 shares sold at an average price of $37.94, as of June 30, 2013.

Royce is one of eight gurus holding AZZ.

Track historical pricing, revenue and net income:



Clearwater Paper Corp. (CLW): Reduced

Impacts Portfolio: -0.05%

Up 26% over 12 months, Clearwater Paper Corp. has a market cap of $1.06 billion; its shares were traded at around $48.55 with a P/E ratio of 22.80.

Clearwater Paper Corp. is a producer of private label tissue and paperboard products. It manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, machine-glazed tissue, bleached paperboard, foam and pulp.

Guru Action: As of Aug. 31, 2013, Chuck Royce reduced out his position by 27.88%, cutting his holding to 905,760 shares. He owns 4.12% of shares outstanding. Over a five-year history, he has averaged a gain of 61% on 2,296,500 shares bought at an average price of $30.05, as of June 30, 2013. On shares sold, he has averaged a gain of 3% on 1,040,624 shares sold at an average price of $46.84, as of June 30, 2013.

His holding history is another remarkable tale of pure gains for five years, topping out at 405% in the second quarter of 2009.

Track historical pricing, revenue and net income:



Study the rest of Chuck Royce’s trades.



Use the GuruFocus Value Screen to find 52-Week Lows and discover potentially deep value stocks held by billionaire investors.

GuruFocus Real Time Picks reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 2 days after the date of the transaction. This feature is for Premium Members only.

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 2.6/5 (5 votes)

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