Chuck Royce Reduces Several Positions in 4th Quarter

Small-cap investor trims holding in electronic and industrial stocks

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Feb 05, 2016
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Chuck Royce (Trades, Portfolio) manages a portfolio composed of 1,200 stocks and he reduced his stake in many stocks during the fourth quarter. The following are his most heavily weighted reduced stakes.

The guru reduced his stake in Benchmark Electronics Inc. (BHE) by 58.72% with an impact of -0.37% on the portfolio.

The company is engaged in the business of manufacturing electronics and it provides its services to original equipment manufacturers of computers and related products for business enterprises, medical devices, industrial control equipment, testing and instrumentation products, and telecommunication equipment. In the third quarter, as a result of continued focus on portfolio mix, lean and operational excellence initiatives, and working capital the company reported a 30 basis point year-over-year and a 10 basis point quarter-over-quarter improvement in its non-GAAP operating margin management.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10 with easy returns of ROE 6.24% and ROA 4.80% that are over performing 58% of the companies in the Global Contract Manufacturers industry. Financial strength has a rating of 8 out of 10, with a cash-to-debt of 51.22 that is far above the industry median of 1.22.

Royce is the largest shareholder of the company among the gurus with 4.81% of outstanding shares, followed by John Buckingham (Trades, Portfolio) with 0.52% and Jim Simons (Trades, Portfolio) with 0.46%.

Royce reduced his stake in MKS Instruments Inc. (MKSI) by 23.68% with an impact of -0.29% on the portfolio.

The company is a provider of instruments, subsystems and process control solutions that measure, control, power, monitor and analyze critical parameters to improve process performance and productivity of advanced manufacturing processes. Fourth quarter had a decrease of 18% from the third quarter of 2015, and a decrease of 15% from the same quarter of 2014.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10, with strong returns of ROE 10.87% and ROA 9.67% that are over performing 69% of the companies in the Global Scientific & Technical Instruments industry. Financial strength has a rating of 8 out of 10 with no debt.

Royce is the company’s largest shareholder among the gurus with 9.13% of outstanding shares, followed by Ken Fisher (Trades, Portfolio) with 1.3%, Joel Greenblatt (Trades, Portfolio) with 0.93%, James Barrow (Trades, Portfolio) with 0.19% and Louis Moore Bacon (Trades, Portfolio) with 0.19%.

Royce also reduced its stake in Applied Industrial Technologies Inc. (AIT) by 23.25% with an impact of -0.23% on the portfolio.

The company is an industrial distributor in North America, Australia, and New Zealand, serving MRO (maintenance, repair, and operations) and OEM (original equipment manufacturing) customers in diversified industries.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10, with strong returns of ROE 14.26% and ROA 7.38% that are over performing 84% of the companies in the Global Industrial Distribution industry. Financial strength has a rating of 6 out of 10, with a cash-to-debt of 0.19 that is far below the industry median of 1.50.

Royce is the largest shareholder among the gurus with 6.97% of outstanding shares, followed by Greenblatt with 1.09% and Barrow with 0.29%.

Royce reduced his stake in Thor Industries Inc. (THO) by 23.25% with an impact of -0.23% on the portfolio, but he is still the main guru holding shares of the company with 4.81% of outstanding shares.

The company is engaged in manufacturing recreational vehicles in the U.S. and sells those vehicles in the U.S. and Canada, as well as related parts and accessories. During the third quarter, sales grew 12% year over year, and gross profit margins increased to 14.2% compared to 13.6% in the prior-year period.

GuruFocus gives the stock a profitability and growth rating of 8 out of 10, with strong returns of ROE 20.07% and ROA 14.08% that are over performing 83% of the companies in the Global Recreational Vehicles industry. Financial strength has a rating of 9 out of 10 with no debt.

Other notable guru shareholders are Jim Simons with 0.34% of outstanding shares, Scott Black (Trades, Portfolio) with 0.34%, Greenblatt with 0.28% and Jeremy Grantham (Trades, Portfolio) with 0.06%.

The guru reduced its stake in Valmont Industries Inc. (VMI) by 28.06% with an impact of -0.23% on the portfolio.

The company is a diversified producer of fabricated metal products and a producer of steel and aluminum pole, tower and other structures. Third quarter revenues declined by 17% from the same quarter of a year before.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10, with easy returns of ROE 9.71% and ROA 4.20% that are over performing 57% of the companies in the Global Metal Fabrication industry. Financial strength has a rating of 5 out of 10, with a cash-to-debt of 0.41 that is below the industry median of 0.74.

Royce is the largest shareholder of the company among the gurus with 4.62% of outstanding shares, followed by Ron Baron with 1.64%, Greenblatt with 0.59%, CI Can Am Small Cap (Trades, Portfolio) with 0.13% and Simons with 0.07%.

Royce reduced his stake in Cal-Maine Foods Inc. (CALM) by 25.59% with an impact of -0.22% on the portfolio. Royce is still the main guru shareholder with 5.39% of outstanding shares.

The company is a producer and marketer of shell eggs in the United States. Its main business is the production, grading, packaging, marketing and distribution of shell eggs. During the second quarter 2016, net sales had a 44.2% increase year over year and were up 57.1% through the first half of this fiscal year.

GuruFocus gives the stock a profitability and growth rating of 8 out of 10, with strong returns of ROE 18.54% and ROA 10.42% that are over performing 96% of the companies in the Global Packaged Foods industry. Financial strength has a rating of 7 out of 10, with a cash-to-debt of 14.61 that is above the industry median of 0.48.

Other notable guru shareholders are Jim Simons with 1.18% of shares outstanding, Cohen with 0.28%, John Hussman (Trades, Portfolio) with 0.28% and Paul Tudor Jones (Trades, Portfolio) with 0.11%.

Royce reduced his stake in Netgear Inc. (NTGR) by 93.08% with an impact of -0.22% on the portfolio, and he holds now 3.3% of outstanding shares of the company.

Netgear is a networking company that delivers products to consumers, businesses and service providers. The company's business is managed in three specific business units: retail, commercial, and service provider.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10, with negative returns of ROE -1.91% and ROA -1.35% that are under performing 67% of the companies in the Global Communication Equipment industry. Financial strength has a rating of 7 out of 10, with no debt.

Other notable guru shareholders are Greenblatt with 1.12%, Simons with 0.59%, Barrow with 0.43% and Dreman with 0.28%.

Royce reduced his stake in Myriad Genetics Inc. (MYGN) by 37.72% with an impact of -0.2% on the portfolio; now he holds 2.03% of outstanding shares of the company.

The company is a molecular diagnostic company, engaged in making a difference in patients' lives through the discovery and commercialization of transformative tests, which assess a person's risk of developing disease, guide treatment decisions and assesses risk of disease progression and recurrence.

GuruFocus gives the stock a profitability and growth rating of 8 out of 10, with strong returns of ROE 13.94% and ROA 12.18% that are over performing 81% of the companies in the Global Diagnostics & Research industry. Financial strength has a rating of 9 out of 10, with no debt.

Other notable guru shareholders are Simons with 1.23%, Fisher with 0.13%, Mario Gabelli (Trades, Portfolio) with 0.04% and Tudor Jones with 0.02%.