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Robert Bruce Top Holdings: American Italian Pasta Company, America Service Group Inc., Kinross Gold Corp., Amerco , Arena Resources Inc. , GAINSCO INC

October 02, 2009
guruek

guruek

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(GuruFocus, October 2, 2009) Bruce Berkowitz of Fairholme Fund is always very candid when asked about his investment approach and he does not mind commenting on his individual holdings. He runs a concentrated portfolio and the room for error is pretty thin, so by opening himself to the public, he better be familiar to the story behind stocks and ready to defend them. Recently, Berkowitz defended his allocating 41% of his assets on Health Care sector in the midst of a national Health Care reform and the uncertainties coming with the debate.

While amazed by his confidence, I started to look who else also has a large allocation in Health Care sector and I found Robert Bruce of The Bruce Fund (BRUFX). Robert Bruce manages a lot smaller fund than Berkowitz. His asset under management is about $200 million, only about 1/50 of that of Berkowitz. His performance for the 10 years through 2008 is as follows:

Performance of Bruce Fund

Year Return (%) S&P500 (%) Excess Gain (%)
2008 -27.27 -37 9.7
2007 -5.13 5.61 -10.7
2006 17.72 15.79 1.9
2005 7.69 4.91 2.8
2004 57.19 12 45.2
2003 66.81 28.7 38.1
2002 9.23 -22.1 31.3
2001 22.48 -11.9 34.4
2000 38.64 -9.1 47.7
1999 -19.78 21 -40.8
.

Robert Bruce had some bumpy rides in the last two years, but who didn’t? YTD, according to Google Finance the fund is up about 34%. That is better than Berkowitz’s Fairholme Fund (FAIRX), which is about up 25%. As a matter of fact, it is interesting to compare the two funds during the 10 years, BRUFX is up 192% during the past 10 years, and FAIRX is up 170%. Brobert Bruce won by small margin.

Any money manager who can make money for their investors during the past 10 years deserves praises. We had a rough decade.

Why then the difference in the investors’ treatment towards the money managers? Today, Berkowitz manages about $10 billion and Robert Bruce manages about $200 million.

Sometimes, life IS not fair.

I do not know whether this has to do with anything or not: I find the way Robert Bruce manages his money very original and interesting, however, I could not find any media coverage of the firm, and what is more important, reading Robert Bruce's annual and semi-annual report, one gets no insight into what the Investment Guru is thinking at the time. Maybe this is something he can improve upon?

Why I don’t just list the top holdings and then give some comments:

No. 1: American Italian Pasta Company (AIPC), Weightings: 16.26% - 459,800 Shares

American Italian Pasta Company is the largest producer and one of thefastest-growing marketers of dry pasta in North America. American Italian Pasta Company has a market cap of $575.1 million; its shares were traded at around $27.21 with a P/E ratio of 9.2 and P/S ratio of 5.2.

Bruce bought 738,400 shares in 1Q06 and he still held 459,800 shares in 2Q09.

No. 2: America Service Group Inc. (ASGR), Weightings: 13.32% - 683,097 Shares

America Service Group Inc. through its subsidiaries Prison Health Services Inc. EMSA Correctional Care Inc. EMSA Military Services Inc. Correctional Health Services Inc. and Secure Pharmacy Plus Inc. contracts to provide managed healthcare services including the distribution of pharmaceuticals to correctional facilities and military installations throughout the United States. America Service Group Inc. has a market cap of $150.1 million; its shares were traded at around $15.9 with a P/E ratio of 30.4 and P/S ratio of 0.3. The dividend yield of America Service Group Inc. stocks is 1.2%.

Robert Bruce bought 151,000 shares in 4Q05 and held 683,097 shares in 2Q09.

No. 3: Kinross Gold Corp. (KGC), Weightings: 7.59% - 344,848 Shares

Kinross Gold Corporation is an entrepreneurial mining company which has become a million-ounce gold producer. With their primary low cost operations on four continents the Company has become a major player on the international market. Kinross Gold Corp. has a market cap of $14.71 billion; its shares were traded at around $20.67 with a P/E ratio of 47 and P/S ratio of 9.1. The dividend yield of Kinross Gold Corp. stocks is 0.5%. Kinross Gold Corp. had an annual average earning growth of 12% over the past 5 years.

Bruce bought 276,800 shares in 3Q06 and he held 344,848 shaers in 2Q09.

No. 4: Amerco (UHAL), Weightings: 7.38% - 163,750 Shares

AMERCO is the holding company for U-Haul International Inc. Amerco Real Estate Company Republic Western Insurance Company and Oxford Life Insurance Company. AMERCO operates in four industry segments: Moving and Storage Operations (U-Haul) Real Estate Property and Casualty Insurance (Republic) and Life Insurance (Oxford). The moving and self-storage operations consist of the rental of trucks and trailers sale of moving aids such as boxes and the rental of self-storage spaces to the do-it-yourself mover. Amerco has a market cap of $862.2 million; its shares were traded at around $44.1 with and P/S ratio of 0.5. Amerco had an annual average earning growth of 10.6% over the past 10 years.

Bruce held 129,000 shares in 4Q05 and 163,750 shares in 2Q09.

No. 5: Arena Resources Inc. (ARD), Weightings: 5.68% - 147,100 Shares

ARENA RESOURCES INC. is engaged in oil and natural gas acquisition exploration development and production with activities in Oklahoma Texas New Mexico and Kansas. The Company has a portfolio of oil and natural gas reserves with approximately 84% of its proved reserves consisting of oil and approximately 16% consisting of natural gas. Approximately 28% of Arena's proved reserves are classified as proved developed producing approximately 5% of its proved reserves are classified as proved developed non-producing approximately 5% are classified as proved developed behind pipe and approximately 62% are classified as proved undeveloped. Arena Resources Inc. has a market cap of $1.31 billion; its shares were traded at around $33.04 with a P/E ratio of 25.7 and P/S ratio of 6.2. Arena Resources Inc. had an annual average earning growth of 112% over the past 5 years.

Bruce held over one million shares in 4Q05 and sold down to 147,100 shares in 2Q09.

No. 6: GAINSCO INC (GAN), Weightings: 4.6% - 240,727 Shares

GAINSCO INC. is a property and casualty insurance holding company concentrating its efforts on three major nonstandard markets: commercial lines personal lines and specialty lines. The commercial lines division includes commercial auto garage general liability and commercial property products. The personal lines division includes personal auto umbrella and personal property products. The specialty lines division is focused on developing growth in professional liability products. Gainsco Inc has a market cap of $60.2 million; its shares were traded at around $13.2 with a P/E ratio of 314.4 and P/S ratio of 0.3.

Bruce held 96,673 shares in 4Q05 and 240,727 shares in 2Q09.

Comments

Robert Bruce is buy-and-hold, concentrated investor. He typically found value among the small- and even micro-cap stocks. His performance entitles better attention from the investors and media, at least from value investors who frequent this website.

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