Chuck Royce (Trades, Portfolio) is the president, co-chief investment officer and portfolio manager of Royce & Associates LLC, a hedge fund with a $23,670 million portfolio composed of 1211 stocks. According to GuruFocus' All-In-One screener, the following are the companies he recently bought that are trading with a wide margin of safety.
During second quarter 2015, he increased his stake in World Acceptance Corp. (WRLD) by 20%, and the company looks undervalued at the current price of $36. The DCF calculator gives a fair value of $351.87 with a current margin of safety of 90%. GuruFocus users gives as fair value half the price suggested by the DCF calculator, with $171.66 that is the average price after 13 votes.
World Acceptance provides small-loan consumer finance companies, offering short-term small installment loans, medium-term larger installment loans, related credit insurance and ancillary products and services to individuals.
The stock is trading with a P/E ratio of 2.70, which is higher than 97% of other companies in the Global Credit Services industry, which has an average P/E ratio of 14.70. The price has dropped 53% during the last 12 months, by 57% year to date and is now 65.47% below its 52-week high and 9.27% above its 52-week low.
WRLD has a profitability and growth rating of 9/10 with strong returns: ROE of 36.27% and ROA of 12.59%. Return on assets is outperforming the industry, ranking higher than 88% of the company’s competitors, which have an average return of 12.59%; even ROE is performing well, outperforming 91% of the industry, which has an average ratio of 8.63%.
World Acceptance's earnings remained strong in the second quarter driven by higher loan volume, higher revenue from insurance and other products and improved margins which had a 1.7% increase over the total revenue reported in the second quarter last year. Net income for the second quarter decreased 1.4% yoy.
Columbia Wanger (Trades, Portfolio) is the main hedge fund holding shares of the company with 8.22% of outstanding shares that is the 0.29% of its total assets, followed by Jim Simons (Trades, Portfolio) with 0.59% and Paul Tudor Jones (Trades, Portfolio) with 0.07%.
During second quarter 2015, he increased his stake in DST Systems Inc. (DST) by 83%, and the company looks undervalued at the current price of $105. The DCF calculator gives a fair value of $217.39 with a current margin of safety of 52%. GuruFocus users give to the company a lower fair price of $151.3, which is the average price after eight votes.
The company is a provider of technology-based service solutions that help clients grow their business and provide their customers an exceptional experience. DST serves clients in the asset management, brokerage, retirement, insurance, healthcare and other markets to help process, communicate and safeguard critical customer information needed to manage life's important business, such as investing money, planning for retirement and maintaining a healthy lifestyle.
The stock is trading with a P/E ratio of 6.90, which is higher than 91% of other companies in the Global Business Services industry, which has an average P/E ratio of 20.00. The price has risen by 12% during the last 12 months, by 9% year to date and is now 23.77% below its 52-week high and 25.44% above its 52-week low.
DST has a profitability and growth rating of 8/10 with good returns: ROE of 48.07%, ROA of 20.23% and ROC of 186.47%. Return on assets is outperforming the industry, ranking higher than 94% of the company’s competitors, which have an average return of 3.63%; even ROE is performing well, outperforming 93% of the industry, which has an average ratio of 8.33%.
Second quarter 2015 diluted earnings per share, had an increase of $0.19 or 15.8% from second quarter 2014. During this last quarter DST agreed to acquire Wealth Management Systems Inc. (TSE:3772), a leading provider of technology-based rollover services and it could repurchase approximately 600,000 shares of its common stock.
Pioneer Investments (Trades, Portfolio) is the main hedge fund with 1.38% of outstanding shares that is 0.23% of its portfolio, followed by Joel Greenblatt with 440,570 shares, amounting to 1.23% of shares outstanding or 0.46% of total assets of his portfolio. The third one is the hedge fund Diamond Hill Capital (Trades, Portfolio) which holds 1.06% of outstanding shares of DST Systems.
During second quarter 2015, he increased his stake in Waddell & Reed Financial Inc. (WDR) by 23.51%, and the company looks undervalued at the current price of $38. The DCF calculator gives a fair value of $75.62 with a current margin of safety of 51%. GuruFocus users confirm almost the same evaluation, giving the company a fair value of $72.52, which is the average price after eight votes.
The company operates as a mutual fund and asset management firm. It provides investment management, investment product underwriting and distribution and shareholder services administration to mutual funds and institutional and separately managed accounts.
The stock is trading with a P/E ratio of 10.60, which is higher than 55% of other companies in the Global Asset Management industry, which has an average P/E ratio of 12.70. The price has dropped 35% during the last 12 months, by 26% year to date and is now 36.05% below its 52-week high and 0.44% above its 52-week low.
WDR has a profitability and growth rating of 8/10 with great returns: ROE of 36.03%, ROA of 19.90% and ROC of 514.19%. Return on assets is outperforming the industry, ranking higher than 92% of the company’s competitors, which have an average return of 3.70%; even ROE is performing well, outperforming 94% of the industry, which has an average ratio of 6%. ROC is slightly above the average level of the recent company’s history and is far from the highest value of 2,098% reached more than 10 years ago.
During the last quarter due to an additional day and a higher effective fee rate during the current quarter, operating revenues rose by 2%, while operating income rose 6%, leading to a 110 basis point improvement in the operating margin.
Chuck Royce (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) are the main shareholders of the company, with 2.49% of shares outstanding, followed by Mario Gabelli (Trades, Portfolio) with 0.48% and Joel Greenblatt (Trades, Portfolio) with 0.36%.
During second quarter 2015, he increased his stake in Deckers Outdoor Corp. (DECK) by 1,358%, and the company looks undervalued at the current price of $63. The DCF calculator gives a fair value of $121.84 with a current margin of safety of 49%. GuruFocus users confirm almost the same evaluation, giving the company a fair value of $103.13, which is the average price after three votes.
The company is engaged in designing, marketing and distribution of footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The company sells its products, including accessories such as handbags and loungewear, through quality domestic and international retailers, international distributors, and directly to end-user consumers both domestically and internationally, through its websites, call centers and retail stores.
The stock is trading with a P/E ratio of 14.70, which is higher than 62% of other companies in the Global Asset Management industry, which has an average P/E ratio of 19.30. The price has dropped 34% during the last 12 months, by 30% year to date and is now 37.20% below its 52-week high and 5.09% above its 52-week low.
DECK has a profitability and growth rating of 8/10 with good returns: ROE of 16.58%, ROA of 11.82% and ROC of 37.50%. Return on assets is outperforming the industry, ranking higher than 84% of the company’s competitors, which have an average return of 3.68%; even ROE is performing well, outperforming 77% of the industry, which has an average ratio of 6.86%.
Driven by meaningful sales increases and continued leverage of the operating expenses, revenue increased 67%, net earnings for the quarter increased 154% and diluted earnings per share increased 153%. They expect this positive momentum to continue, and they are increasing their guidance for the remainder of the year.
Chuck Royce (Trades, Portfolio) is the main shareholder of the company with 2.46% of outstanding shares, followed by Jim Simons (Trades, Portfolio) with 0.12% and David Dreman (Trades, Portfolio) who holds an easy stake of 0.01%.
During second quarter 2015, he increased his stake in Buckle Inc. (BKE) by 2%, and the company looks undervalued at the current price of $40.30. The DCF calculator gives a fair value of $69.36 with a current margin of safety of 42%. GuruFocus users confirm almost the same evaluation, giving the company a fair value of $77.84, which was the average price after three votes.
The company is a retailer of casual apparel, footwear and accessories for fashion conscious young men and women. It markets a selection of mostly brand name casual apparel including denims, other casual bottoms, tops, sportswear, outerwear, accessories, and footwear. It operates 450 stores located in 43 states throughout the continental United States.
The stock is trading with a P/E ratio of 12.20, which is higher than 76% of other companies in the Global Apparel Stores industry, which has an average P/E ratio of 20.90. The price has dropped 16% during the last 12 months, by 24% year to date and is now 28.36% below its 52-week high and 1.23% above its 52-week low.
BKE has a profitability and growth rating of 7/10 with great returns: ROE of 39.95%, ROA of 27.78% and ROC of 103.19%. Return on assets is outperforming the industry, ranking higher than 98% of the company’s competitors, which have an average return of 3.25%; even ROE is performing well, outperforming 94% of the industry, which has an average ratio of 7.72%. All these ratios are even far above the average ratios of the recent company’s history.
During the last quarter net sales increased 0.1% and merchandise margins for the quarter were down 25 basis points.
Chuck Royce (Trades, Portfolio) is far the main shareholder of the company with 13.68% of outstanding shares that is 1.28% of his total assets, followed by Joel Greenblatt (Trades, Portfolio) with 1.03% of shares outstanding and Scott Black (Trades, Portfolio) with 0.39% that is 1.17% of total assets he manages.
Summary
All these companies are trading with a very wide margin of safety and good P/E ratios. All of them have positive and strong profitability, and the recent market correction can offer an even higher margin of safety in the near future.
| Ticker | Margin of Safety | P/E |
| WRLD | 90% | 2.70 |
| DST | 52% | 6.90 |
| WDR | 51% | 10.60 |
| DECK | 49% | 19.30 |
| BKE | 42% | 12.20 |
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