Chuck Royce (Trades, Portfolio), a pioneer in small-cap investing at The Royce Funds, reported 14 new adjustments to the stock holdings in his portfolio on Dec. 31, Real Time Picks reported.
The three positions he made significant increases to were Amber Road (AMBR, Financial), Synalloy Corp. (SYNL, Financial) and CUI Global Inc. (CUI, Financial).
Royce founded The Royce Funds in 1972. As of Dec. 31, it had assets under management of $17.6 billion, with $126 million invested by officers, employees and families of the firm. It is also an affiliate of Legg Mason.
When investigating stocks, Royce has said that he prizes three particular things: strong balance sheet, record of business success and a strong outlook for making money going forward. All managers also employ a bottom-up research emphasis that prioritizes fundamentals of a company.
At third-quarter end, the fund owned a vast portfolio of 1,234 stocks, 176 of which were new buys. The firm allocates its largest weighting to the industrials sector, which composes 26.5% of stocks. The next largest sector represented is technology, which forms 21.3% of stocks.
In a Jan. 9 interview, Royce offered this thoughts on the small-cap landscape of the near future.
“Going forward, we expect investors to increasingly focus on individual company attributes, especially earnings, as well as company-specific risks,” he said. “Reuters reported in late November that individual company volatility has been on the rise, with earnings news creating the most extreme movements up or down.”
“We think we could see a similar performance pattern in 2018, with leadership coming from small-caps that post stronger earnings growth,” he said.
The increases
Amber Road
Royce added 14.7% to his stake in Amber Road, increasing it by 234,857 shares to 1,834,471 shares. The stock’s price on Dec. 31 was around $7 per share.
Amber Road Inc. has a market cap of $225.330 million; its shares were traded around $8.28 with and P/S ratio of 2.92.
Synalloy Corp.
Chuck Royce (Trades, Portfolio) upped his position in Synalloy Corp. by 26.6%, translating to 191,761 shares. After the transaction he held 913,509 shares. The share price on Dec. 31 was around $13.
Synalloy Corp. has a market cap of $114.960 million with and P/S ratio of 0.64. The trailing 12-month dividend yield is 0.99%. The forward dividend yield is 1%.
CUI Global Inc.
Royce acquired 695,000 shares of CUI Global Inc., raising the position by 75% to 1,621,107 shares. The share price was around $3.
CUI Global Inc. has a market cap of $73.580 million with and P/S ratio of 0.69.
See Chuck Royce (Trades, Portfolio)’s portfolio here.
