Van Den Berg Sells UCP, Houston Wire & Cable

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Jul 14, 2015
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Value investor Arnold Van Den Berg (Trades, Portfolio) is the portfolio manager for the CM Value I fund at his Century Management firm. On June 30, the fund sold out of two holdings — UCP Inc (UCP, Financial) and Houston Wire & Cable Co (HWCC, Financial) — according to data reported by GuruFocus Real Time Picks.

Van Den Berg sold 620,335 shares of UCP for an average of $8.35 per share. UCP acquires and develops land and sells lots to third-party homebuilders. The stock dropped 45% over the last year, closing at $7.15 on July 9.

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In Q1 2015, UCP’s net loss improved to $1.8 million compared to net loss of $2.5 million in the year-ago period. This was attributed to lower SGA expenses during the quarter. UCP maintains a healthy balance sheet with a current ratio over one, indicating the company can cover short-term obligations. However, long-term debt increased in 2014 to $135.5 million, up from $31 million the year before.

Van Den Berg also sold out of Houston Wire, selling 898,716 shares for an average of $9.39 per share. The company produces a variety of wires and cables for the utility, industrial, and infrastructure markets. The stock declined 18% in the past year and closed at $10.02 on July 9. The current P/E ratio is 13.01 and the P/S ratio is 0.47.

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For the first quarter, Houston Wire reported that net income declined 41.6% from the year-ago quarter to $2.2 million. CEO Jim Pokluda said in the press release that low oil prices depressed industrial demand, and low metal prices both affected the company’s sales during the quarter.

Over the past five years, the company’s revenue grew by 8.1%, while EBITDA grew by 11.4%. In 2014, EBITDA per share was $1.60, up from $1.12 the year before. Houston Wire’s dividend yield is 4.8%, while the payout ratio is 63%.

Van Den Berg founded his investment firm Century Management in 1974. He oversees the CM Value I separate account strategy, all the balanced separate account strategy, and the CM Advisors Fund.

The CM Value I fund invests in undervalued stocks regardless of market size or capitalization. The fund has underperformed the S&P 500 over the last three, five, and 10 years. Net total returns over the past 10 years was 2.9% compared to the S&P 500’s 8.29%.

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