Arnold Van Den Berg is the founder of Austin-based Century Management. He and his team seek companies that are trading at discounts to their intrinsic value either because they are lesser known, have a short-term problem or are temporarily out of favor. Founded in 1974, Van Den Berg’s assets under management have grown to $2 billion as of March 2013.
In the second quarter of 2013, he found three companies matching his investment criteria and added them to his portfolio: Key Energy Services Company (KEG, Financial), II-VI Inc. (IIVI, Financial) and Era Group Inc. (ERA, Financial).
Era Group (ERA)
His smallest new position, Van Den Berg purchased 24,680 shares of Era Group at an average price of $25 per share in the second quarter, giving it a 0.066% weight in his portfolio.
Era Group is a helicopter operator based in Houston, with a $516.41 market cap. It was previously a wholly owned subsidiary of SEACOR Holdings Inc. (CHK) until it was spun off on Jan. 31, 2013, to SEACOR shareholders. Van Den Berg does not hold Seacor shares.
In its first quarter as a public company, Era achieved net income of $6.7 million, and operating revenues of $67.7 million, after a net loss of $4.6 million and revenues of $61.1 million in the first quarter of 2012. It attributed the growth in part to an impairment charge in the prior-year period from a Brazilian joint venture it engaged in. Revenue growth was also impacted by a $10.9 million additional revenue from oil and gas activities due to new medium helicopters being put into place and an associated increase in flight hours, a new international contract, increased activity in Alaska and resumed services with a previous customer.
Era’s balance sheet also contains approximately $82.21 million in cash, as well as approximately $488 million in long-term liabilities and debt. The company has not seen free cash flow in its past four years of operations.
It has a P/E ratio of 91.6, P/B ratio of 1.3 and P/S ratio of 2.2.
II-VI Inc. (IIVI)
Van Den Berg allocated 0.11% of his portfolio to II-VI Inc., a computer hardware company. The new position totals 63,895 shares, purchased at an average price of $16.
IIVI Inc. is a creates high-tech products through synthetic crystal materials growth, optics fabrication and electronics component manufacture. Its products are used in a range of industries, from industrial and military to telecommunications and medical. It has a $1.06 billion market cap and share price of $17.10 Wednesday, after a 6.2% decline this year.
The company has seen significant growth over the past 10 years, as indicated on its 10-year financial chart:
At first quarter’s end, II-VI had $260 million on its balance sheet, with approximately $141 million in long-term liabilities and debt. The company has also been cash flow generative for the past decade.
The Peter Lynch chart indicates that it is undervalued:
In the company’s fiscal third quarter ended March 31, 2013, II-VI reported a bookings decrease of 4% from the previous year, and a revenues increase of 9%. Net earnings were $15.87 billion, compared to $13.99 billion the previous year.
II-VI has a P/E of 19.8, P/B of 1.7 and P/S of 2. Its P/B and P/S ratios are both near their respective three-year low.
Key Energy Services Company (KEG)
In his largest new position, Van Den Berg purchased 2,124,150 shares of Key Energy Services for $6.50 per share, making up 1.3% of his portfolio.
Key Energy is the largest rig-based well services company in the industry, and has a $1.01 billion market cap. Its share price Wednesday is $6.65, after sliding 4% year to date.
In the first quarter 2013, Key Energy reported $428.4 million in revenues, down from $486.8 million the previous year. Its net loss amounted to $186,000, compared to a net gain of $2.58 million the previous year.
The company ended the quarter with $39.9 million in cash, an increase from $31.94 million the previous year.
Commenting on the setback in financial results during the quarter, Key’s chairman, president and CEO, Dick Alario, said: "Despite historically high oil prices and improving natural gas prices during the first quarter, U.S. customer activity declined further from the fourth quarter of 2012, as U.S. onshore drilling rig counts declined 3% compared to the fourth quarter 2012. Against this backdrop in our U.S. operations, our well completion related coiled tubing and frac stack and flowback operations generated operating income growth quarter-over-quarter despite revenue declines. Internationally, our largest customer in Mexico reduced activity during the quarter, which negatively impacted our results in the country, and more recently initiated spending reductions in certain producing assets."
Longer term, Key had the following revenue and earnings results:
See Arnold Van Den Berg’s portfolio here. Also check out the Undervalued Stocks, Top Growth Companies, and High Yield stocks of Arnold Van Den Berg.
In the second quarter of 2013, he found three companies matching his investment criteria and added them to his portfolio: Key Energy Services Company (KEG, Financial), II-VI Inc. (IIVI, Financial) and Era Group Inc. (ERA, Financial).
Era Group (ERA)
His smallest new position, Van Den Berg purchased 24,680 shares of Era Group at an average price of $25 per share in the second quarter, giving it a 0.066% weight in his portfolio.
Era Group is a helicopter operator based in Houston, with a $516.41 market cap. It was previously a wholly owned subsidiary of SEACOR Holdings Inc. (CHK) until it was spun off on Jan. 31, 2013, to SEACOR shareholders. Van Den Berg does not hold Seacor shares.
In its first quarter as a public company, Era achieved net income of $6.7 million, and operating revenues of $67.7 million, after a net loss of $4.6 million and revenues of $61.1 million in the first quarter of 2012. It attributed the growth in part to an impairment charge in the prior-year period from a Brazilian joint venture it engaged in. Revenue growth was also impacted by a $10.9 million additional revenue from oil and gas activities due to new medium helicopters being put into place and an associated increase in flight hours, a new international contract, increased activity in Alaska and resumed services with a previous customer.
Era’s balance sheet also contains approximately $82.21 million in cash, as well as approximately $488 million in long-term liabilities and debt. The company has not seen free cash flow in its past four years of operations.
It has a P/E ratio of 91.6, P/B ratio of 1.3 and P/S ratio of 2.2.
II-VI Inc. (IIVI)
Van Den Berg allocated 0.11% of his portfolio to II-VI Inc., a computer hardware company. The new position totals 63,895 shares, purchased at an average price of $16.
IIVI Inc. is a creates high-tech products through synthetic crystal materials growth, optics fabrication and electronics component manufacture. Its products are used in a range of industries, from industrial and military to telecommunications and medical. It has a $1.06 billion market cap and share price of $17.10 Wednesday, after a 6.2% decline this year.
The company has seen significant growth over the past 10 years, as indicated on its 10-year financial chart:
At first quarter’s end, II-VI had $260 million on its balance sheet, with approximately $141 million in long-term liabilities and debt. The company has also been cash flow generative for the past decade.
The Peter Lynch chart indicates that it is undervalued:
In the company’s fiscal third quarter ended March 31, 2013, II-VI reported a bookings decrease of 4% from the previous year, and a revenues increase of 9%. Net earnings were $15.87 billion, compared to $13.99 billion the previous year.
II-VI has a P/E of 19.8, P/B of 1.7 and P/S of 2. Its P/B and P/S ratios are both near their respective three-year low.
Key Energy Services Company (KEG)
In his largest new position, Van Den Berg purchased 2,124,150 shares of Key Energy Services for $6.50 per share, making up 1.3% of his portfolio.
Key Energy is the largest rig-based well services company in the industry, and has a $1.01 billion market cap. Its share price Wednesday is $6.65, after sliding 4% year to date.
In the first quarter 2013, Key Energy reported $428.4 million in revenues, down from $486.8 million the previous year. Its net loss amounted to $186,000, compared to a net gain of $2.58 million the previous year.
The company ended the quarter with $39.9 million in cash, an increase from $31.94 million the previous year.
Commenting on the setback in financial results during the quarter, Key’s chairman, president and CEO, Dick Alario, said: "Despite historically high oil prices and improving natural gas prices during the first quarter, U.S. customer activity declined further from the fourth quarter of 2012, as U.S. onshore drilling rig counts declined 3% compared to the fourth quarter 2012. Against this backdrop in our U.S. operations, our well completion related coiled tubing and frac stack and flowback operations generated operating income growth quarter-over-quarter despite revenue declines. Internationally, our largest customer in Mexico reduced activity during the quarter, which negatively impacted our results in the country, and more recently initiated spending reductions in certain producing assets."
Longer term, Key had the following revenue and earnings results:
See Arnold Van Den Berg’s portfolio here. Also check out the Undervalued Stocks, Top Growth Companies, and High Yield stocks of Arnold Van Den Berg.
