Chuck Royce (Trades, Portfolio) is known as one of the pioneers of small-cap investing. He has been the CEO of the Royce Funds since 1972. Royce also mentored the relentless value investor Mariko Gordon (Trades, Portfolio), who founded Daruma Capital Management with zero assets in 1995, and has since run the firm's valuation to close to $2 billion.Â
On Nov. 11, Royce reduced his position in Simpson Manufacturing Co. Inc. (SSD, Financial), selling 453,300 shares for a 24.87% reduction in his stake. He now owns 1,369,233 total shares in this holding.
Simpson Manufacturing has a market cap of $1.65 billion, an enterprise value of $1.41 billion, a P/B ratio of 1.96, a quick ratio of 3.96 and a dividend yield of 1.75%.
Simpson Manufacturing is an international company that manufactures and builds structural connections, anchors, and other products for new construction, retrofitting and DIY markets.Â
Simpson Manufacturing has the following positive signs according to GuruFocus:
- Simpson Manufacturing has no debt.
- The operating margin is expanding.
- The stock's dividend yield is close to the three-year high.
- The P/B ratio of 1.94 is close to the one-year low of 1.85.
On Sept. 30, Royce also reduced his position in La-Z-Boy Inc. (LZB, Financial) by 375,600 shares for a 82.84% reduction in the holding. He now owns 77,820 total shares in this holding. The stock price recently plummeted and is now trading at $24.07 per share.
La-Z-Boy has a market cap of $1.21 billion, an enterprise value of $1.15 billion, a P/E ratio of 17.21, a quick ratio of 1.80 and a dividend yield of 1.40%.
La-Z-Boy has several good signs according to GuruFocus:
- The operating margin is expanding.
- The P/B ratio of 2.23 is close to the one-year low of 2.23.
- The dividend yield is close to the five-year high.
- P/B ratio is close to the one-year low.
- Piotroski F-Score of 7 is indicating a very healthy situation.
There is one severe warning sign and medium warning sign with La-Z-Boy:
- Asset growth is faster than revenue growth. If a company builds assets at 7.1% per year, faster than its revenue growth rate of 3.5% over the past five years, it means that the company may be getting less efficient.
- Their customer service is not outstanding. I have been calling the company to gain further information as to whether or not all of their products are handmade, and I was on the phone for over 30 minutes waiting for a response. It turns out that all the products are handmade.
It’s noteworthy that Royce would be reducing his holdings in two solid companies in the third quarter.
Cheers to your investment success.
