Guru Richard Snow (Trades, Portfolio) is the founder, president and chief investment officer of Snow Capital Management LP He has more than 30 years of investment experience as a research analyst and portfolio manager. Snow likes to employ a fundamental, bottom-up stock picking process of value investing. Snow is a contrarian who likes to focus on relative value when he makes his investment decisions. Snow holds a B.A. from Duquesne University and an MBA in finance from the University of Pittsburgh.
On March 28, Snow reduced 159,808 shares of L.B. Foster Co. (FSTR) from his portfolio.
L.B. Foster Co.
L.B. Foster was founded more than a century ago in 1902. The company supplies transportation, construction, utility, energy, recreation and agriculture markets with the materials necessary to build and maintain their infrastructure. Today, L.B. Foster Co. is a leading manufacturer, fabricator and distributor of quality transportation and construction materials. As of December 2015, L.B. Foster had approximately 1,406 employees, 1,245 within the Americas and 161 located in Europe.
In the fourth quarter 2015, Keeley funds commented on L.B. Foster and Co.
The industrials sector was difficult during the quarter and L.B. Foster and Co. (NASDAQ:FSTR) was the largest detractor in the sector and the portfolio’s second largest detractor overall. The stock fell over 64 percent during the quarter and continues struggle after falling earlier in the year, costing the Fund 54 basis points in performance. The company is still reeling from a legal battle with long-time client Union Pacific (NYSE:UNP), which is lasting longer the expected. Management thought the lawsuit was controllable but UNP continues to press and will not settle. This resulted in management withdrawing all UNP related business from its earnings guidance. The company also made an acquisition of some oil service assets in an attempt to diversify its business. Given the decline in oil, one could argue the purchase was ill-timed. But we continue to see a company selling for less than ten times earnings after eliminating UNP revenue, which basically gives zero value for the recent acquisitions.
According to GuruFocus, L.B. Foster Co. has a Financial Strength rating of 7/10 with a cash to debt ratio of 0.20, ranking lower than 65% of the 813 companies in the global railroads industry. The company also has a 6/10 Profitability & Growth rating with a -7.24% return on equity, ranking beneath 81% of the companies in their industry.
It is likely that Richard Snow (Trades, Portfolio) decided to reduce his position in L.B. Foster Co. because the company has multiple warning signs in an industry where oil prices have been declining. This increases the likelihood that L.B. Foster's holding price will continue to stagnate in the immediate future.
