David Nadel (Trades, Portfolio), manager of the Royce International Premier Fund, disclosed this week his fund’s top five buys include two new holdings and increased bets in three existing positions.
Nadel, former senior portfolio manager at Neuberger Berman Inc., joined Royce Funds in 2006. According to the firm's website, Nadel said the fund seeks to build a portfolio containing “high-quality, world-class businesses.” The fund manager seeks “premier” non-U.S. small-cap securities with discernable competitive advantages, high returns on invested capital and sustainable franchises.
As of quarter-end, the equity portfolio contains 53 stocks, including two new positions: Restore PLC (LSE:RST, Financial) and TGS-NOPEC Geophysical Co. ASA (OSL:TGS, Financial). The fund’s top three position boosts were Benefit One Inc. (TSE:2412, Financial), XP Power Ltd. (LSE:XPP, Financial) and Consort Medical PLC (LSE:CSRT, Financial).
Restore PLC
The fund purchased 1,705,000 shares of Restore PLC, giving the position 1.73% equity portfolio space. Shares averaged 3.02 pounds ($3.93) during the quarter.
U.K.-based Restore provides services to offices and workplaces through two business segments: document management and relocation. GuruFocus ranks the company’s financial strength 6 out of 10: Even though the Altman Z-score suggests slight financial distress, Restore’s Piotroski F-score of 7 suggests strong business operations. Additionally, the company’s return on invested capital of 9.93% exceeds its weighted average cost of capital, suggesting value creation.
Restore’s profitability ranks 8 out of 10 on positive signs like expanding profit margins and a three-year revenue growth rate that outperforms 88.71% of global competitors.
TGS-NOPEC
The fund purchased 220,000 shares of TGS-NOPEC, giving the position 1.36% equity portfolio space. Shares averaged 241.46 Norwegian kroner ($27.57) during the quarter.
The Norwegian energy equipment and services company provides geoscientific data products and services to assist energy companies with licensing rounds and the preparation of regional data programs. GuruFocus ranks the company’s financial strength 9 out of 10 on several positive signs, which include robust interest coverage of 235.97, a strong Piotroski F-score of 7 and a solid Altman Z-score of 5.51. Additionally, the company’s return on invested capital of 20.55% exceeds its weighted average cost of capital.
The Wasatch International Growth (Trades, Portfolio) fund also has a holding in TGS-NOPEC.
Benefit One
The fund added 310,000 shares of Benefit One, boosting the position 110.71% and the equity portfolio 1.37%. Shares averaged 1,917.73 yen ($17.20) during the quarter.
The Japanese employment services company provides lodging facilities, schools and sports clubs to promote welfare work and sales. GuruFocus ranks the company’s financial strength 9 out of 10 and profitability 8 out of 10 on several positive investing signs, which include robust interest coverage, expanding profit margins and a return on invested capital of 66.7%, significantly outperforming its weighted average cost of capital. Even though the company’s revenue growth decelerated over the trailing 12 months, Benefit One’s three-year revenue growth rate of 14% is outperforming 68% of global competitors. Additionally, the company’s business predictability ranks four stars out of five on strong and consistent earnings over the past 10 years.
XP Power
The fund added 97,000 shares of XP Power, increasing the position 45.54%. Shares averaged 21.47 pounds during the quarter.
The U.K.-based computer hardware company develops and manufactures power control components, including AC-DC power supplies and DC-DC converters. GuruFocus ranks the company’s profitability 8 out of 10: Even though the Piotroski F-score ranks a modest 4 out of 10, XP Power’s business predictability ranks four stars out of five on consistent revenue and earnings growth. Additionally, the company’s operating margin is still outperforming 93% of global competitors despite contracting 3.9% per year over the past five years.
Consort Medical
The fund added 725,000 shares of Consort Medical, increasing the position 60.96%. Shares averaged 8.82 pounds during the quarter.
The U.K.-based company manufactures various medical devices, including inhaler, auto-injector, nasal and ocular technologies. GuruFocus ranks the company’s financial strength 6 out of 10: Although it has a strong Piotroski F-score of 8, Consort Medical’s Altman Z-score of 2.13 suggests mild financial distress.
Disclosure: No positions.
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