Chuck Royce (Trades, Portfolio) of Royce and Associates actively reduced his portfolio positions in a number of stocks in August with the greatest selling activity in technology stocks. Royce is the president and co-chief investment officer of Royce and Associates which manages $23.67 billion in equity investments. The Royce mutual funds are focused on small-capitalization stocks with market caps of less than $5 billion.
In August, Royce’s funds sold four technology stocks for a total decrease in the portfolio of $43.3 million. Stocks sold included Alpha & Omega Semiconductor Ltd. (AOSL, Financial), Numerex Corporation (NMRX, Financial), Netgear, Inc. (NTGR, Financial) and Mantech International Corporation (MANT, Financial). All of these technology stocks are down significantly below the technology sector year to date.
Alpha & Omega Semiconductor Ltd.
Alpha & Omega Semiconductor Ltd. is a manufacturer of specialized semiconductors. The company has its headquarters in California; however, its business and manufacturing operations take place in Hong Kong, Macau, China, Taiwan, Korea and Japan. The company’s power semiconductors are primarily used in computing and consumer electronics. The company primarily markets three main products which include power discretes, power integrated circuits and packaging and testing services. In its most recent earnings the company reported revenue of $81.5 million, down 1% from the comparable quarter and off $0.73 million from analysts’ average estimate. Earnings for the quarter were -$0.07, in line with analysts’ expectations. The company has a market cap of $185.7 million. In August the stock was down 2.55% and year-to-date the stock has fallen 8.47%.
Numerex Corporation
Numerex Corporation is a provider of enterprise solutions. The company is based in Georgia, and its business focuses on developing and improving machine-to-machine solutions for large corporations. Its most recent earnings report showed revenue of $25.7 million, up 13.8% from the comparable quarter yet missing analysts’ average estimate by $0.22 million. Earnings per share were $0.01 for the quarter, also missing analysts’ average estimate by $0.02. The company’s entire business is primarily focused on machine-to-machine enterprise solutions. The company has a market cap of $168.41 million. Despite gains of 10.4% in August, the stock is down 20.25% year to date.
Netgear, Inc.
Netgear is a manufacturer of networking equipment. The company is based in California and produces routers, modems, adapters and switches that help improve networking efficiency. Its revenue is segmented by client type and includes sales to consumers, businesses and large service providers. In the company’s most recent quarter it produced revenue of $288.78 million, exceeding analysts’ consensus for the quarter however down 14.5% from the comparable quarter. Earnings per share for the quarter were $0.29, missing analysts’ average expectation by $0.01. The company has a market cap of $925.72 million. In August the company’s stock lost 9.29% and year to date it is down 19.06%.
Mantech International Corporation
Mantech is a technology provider for national security programs. It is based in Virginia, and its solutions focus on systems engineering for security intelligence programs. Its clients include the U.S. departments of defense, state, homeland security, energy and justice. The company has a market cap of $978.63 million. In its most recent earnings it reported revenue of $384.38 million, down 17.0% from the comparable quarter and missing analysts’ average estimate by $13.39 million. Earnings per share for the second quarter were $0.33 missing analysts’ average estimate by $0.01. In August the stock was down 8.12% and year to date the stock has fallen 13.79%.
In addition to technology stocks the Royce funds also sold off shares in industrials and basic materials in August. In industrials the company sold L B Foster Company (FSTR, Financial), Global Power Equipment Group, Inc. (GLPW, Financial) and ePlus, Inc. (PLUS, Financial). In basic materials the company sold Schweitzer-Mauduit International, Inc. (SWM, Financial).
Overall, in August the Royce funds suffered losses along with the market which saw a decrease of -6.26% from the S&P 500 for the month and a decrease of 6.58% for the Dow Jones Industrial Average. For the month the best performing fund for Royce and Associates was the Royce European Small-Cap Fund while the worst performing fund was the Royce Smaller-Companies Growth Fund.
The Royce European Small-Cap Fund invests primarily in small-cap and mid-cap stocks in Europe. For the month of August the fund had a return of -3.22%.
The Royce Smaller-Companies Growth Fund invests primarily in U.S. small-cap and mid-cap stocks with a market capitalization of up to $7.5 billion. For the month of August the fund had a return of -7.42%.
