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Chuck Royce Makes Two Large Reductions

October 05, 2013 | About:
Monica Wolfe

Monica Wolfe

119 followers
Over the past week Chuck Royce has made some notable reductions to two of his holdings. These reductions were reported by GuruFocus Real Time Picks and both occurred on Sept. 30. Real Time picks are interesting to follow because they keep you closely informed to the big moves that the gurus are making throughout the duration of a quarter. Molex (MOLXA)

On Sept. 30, Royce cut his holdings in Molex by -83.03%. The guru sold a total of 8,198,028 shares of the company’s stock at an average price of $38.30 per share. This sell leaves the guru with 1,675,100 shares of Molex, representing 0.98% of the company’s shares outstanding.

This cut in his stake is the first reduction that Royce has made since 2010Q4. Royce has seen an average gain of 81% on his holdings in Molex. Royce made this sell as the company’s price has hit a 10-year high.

Royce’s holding history of Molex:

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Molex designs, manufactures and sells terminals, connectors, cable assemblies, interconnection systems, sockets, antennas, integrated products and switches.

Molex’s historical revenue and net income:

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Molex announced that in its fiscal year 2013 the company experienced double-digit growth in its medical business.

The company also announced that they had agreed to be acquired by Koch Industries for $38.50 per share in cash. This equates to a total equity value of approximately $7.2 billion. Based on the closing stock prices on Sept. 6, the purchase price represents a 42% premium to the current equity value of Molex’s publicly-traded stock. More specifically, a 31% to the Common Stock and a 56% increase to the Class A Common Stock.

To read more about this transaction click here.

The analysis on Molex reports that the company has issued $65.82 million of debt over the past three years, the revenue has slowed down over the past year, the dividend yield is at a 5-year low and its price is at a 10-year high.

The Peter Lynch Chart suggests that the company is currently overvalued:

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Molex has a market cap of $6.82 billion. Its shares are currently trading at around $38.28 with a P/E ratio of 28.20, a P/S ratio of 1.90 and a P/B ratio of 2.70. The company’s dividend yield is currently at 2.40%.

There are currently three gurus that hold a stake in MOLXA.

Nu Skin Enterprises (NUS)

Royce’s second reduction was in Nu Skin. The guru cut his position -41.42% by selling a total of 2,839,744 shares of the company’s stock. Royce sold his shares at an average price of $98.24 per share. The price is now trading up about 1% to $99.50 per share.

After his most recent reduction Royce holds on to 4,016,905 shares of the Nu Skin stock, representing 6.85% of the company’s shares outstanding. Despite the size of the sell, Royce is still the largest guru shareholder of the company’s stock.

Royce’s historical holding history:

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Nu Skin operates as a direct selling company with operations in 53 markets. The company develops and distributes personal care products and nutritional supplements that are sold under the Nu Skin and Pharmanex brands.

Nu Skin’s historical revenue and net income:

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The company has reported that they will release their third quarter results on Oct. 22, 2013, prior to market open.

The company has recently been growing their team as they recently added three new scientists to their research and development team.

Nu Skin also recently obtained FDA clearance of their facial spa device. The company estimates that the device will be available for purchase around the first half of 2014.

Nu Skin was also named one of Utah’s fastest growing companies by Utah Business magazine for the fourth consecutive year.

The analysis reports that the company has issued $74.096 million of debt, their dividend yield is at a 10-year low, the price is at a 10-year high and its operating margin is expanding.

The Peter Lynch Chart suggests that the company is currently overvalued:

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Nu Skin Enterprises has a market cap of $5.84 billion. Its shares are currently trading at around $99.50 with a P/E ratio of 25.10, a P/S ratio of 2.60 and a P/B ratio of 8.60. The company had an annual average earnings growth of 14.6% over the past ten years.

Check out Chuck Royce’s real time picks here.

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Rating: 2.5/5 (4 votes)

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