Canadian company Pason Systems (TSX:PSI, Financial), the Fund’s top detractor, provides instrumentation and data management systems for drilling rigs. The company saw its near-term outlook weaken in 2019 as North American drilling activity declined through the year on supply/demand concerns exacerbated by slumping oil and natural gas prices as well as the slower global economy. We think the market has more than fully discounted the negative impact of these developments on Pason’s near-term fundamentals while also seeming not to recognize the attributes that look obvious to us: a durable, high-ROIC business model, an innovative and robust technology pipeline, and a debt-free balance sheet.
From Chuck Royce (Trades, Portfolio)'s Royce Premier Fund fourth-quarter 2019 commentary.