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Holly LaFon
Holly LaFon
Articles (9890)  | Author's Website |

Steven Romick Discloses 2 Stock Buys

FPA Crescent Fund manager reports 2nd-quarter portfolio, sells Axalta and Alcoa

FPA Crescent Fund’s Steven Romick (Trades, Portfolio) reported his second-quarter portfolio on Thursday, showing that he bought two stocks and exited two of his positions.

Romick runs the FPA Crescent Fund along with two colleagues and has built it to $15 billion in assets. Founded in 1993, the fund may invest in both equity and debt, and sometimes sells securities short, such as its current bet against the SPDR S&P Regional Banking (KRE). Primarily, it seeks stocks of large and small market capitalizations that have low valuations and attractive future prospects based on fundamental security analysis.

The fund’s second-quarter buys were Olympus Corp. (TSE:7733) and Cabot Corp. (NYSE:CBT). It sold its stakes in Axalta Coating Systems Ltd. (NYSE:AXTA) and Alcoa Corp. (NYSE:AA).

At second quarter-end, the equity portfolio listed 49 positions, which were valued at $9.62 billion. The largest positions were American International Group Inc. (NYSE:AIG) at 5.95% of space, Arconic Inc. (NYSE:ARNC) at 5.11% and Broadcom Inc. (NASDAQ:AVGO) at 3.99%.

FPA Crescent Fund is also most heavily sector weighted in financial services at 37.7%, technology at 30.2% and industrials at 11.3%.

In his first-quarter letter, Romick said that he was continuing to “exercise restraint:”

“We only invest where we believe there is an excellent prospect for return combined with a margin of safety. A well-constructed new home does not need someone to come in and remodel the kitchen. Particularly following such a robust first quarter, we find little opportunity to use the tools at our disposal. Owning little else other than stocks makes us look more homogenous in terms of exposure, for a period of time anyway – although the equities we hold and the sectors in which we’re invested look nothing like any index with significant sector overweight and underweight differentials.”

Romick’s new buys

Olympus Corp. (TSE:7733)

Romick purchased 6,219,900 shares of Olympus Corp., giving it 0.72% portfolio weight. The stock’s second quarter share price averaged 1,248 yen.

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Olympus Corp has a market cap of 1,660.67 billion yen; its shares were traded around 1,223.00 yen with a price-earnings ratio of 204.36 and price-sales ratio of 2.09. The trailing 12-month dividend yield of Olympus Corp. is 2.47%. The forward dividend yield of Olympus Corp. is 3.29%. Olympus Corp. had an annual average earnings growth of 0.10% over the past 10 years.

Cabot Corp. (NYSE:CBT)

Romick purchased 600,021 shares of Cabot Corp., giving it 0.3% portfolio space. The stock’s second quarter share price averaged $45.

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Cabot Corp. has a market cap of $2.6 billion; its shares were traded around $44.46 Thursday with a price-earnings ratio of 10.02 and price-sales ratio of 0.85. The trailing 12-month dividend yield of Cabot Corp. is 3.00%. The forward dividend yield of Cabot Corp. is 3.11%.

Sales

Axalta Coating Systems Ltd. (NYSE:AXTA)

Romick sold 663,614 shares of Axalta Coating Systems, which had an impact of 0.17% on the portfolio. The stock’s second-quarter share price averaged $27.

1ea44beefa287e9c2963c9fc41f01110.png

Axalta Coating Systems Ltd. has a market cap of $6.89 billion; its shares were traded around $29.38 Thursday with a price-earnings ratio of 38.68 and price-sales ratio of 1.56. Axalta Coating Systems Ltd. had an annual average earnings growth of 12.4% over the past five years.

Alcoa Corp. (NYSE:AA)

Romick sold 924,570 shares of Alcoa Corp., which had an impact of 0.27% of the portfolio. The stock’s second-quarter share price averaged $25.

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Alcoa Corp. has a market cap of $4.17 billion; its shares were traded around $22.50 Thursday with a price-sales ratio of 0.31.

See Steven Romick (Trades, Portfolio)’s portfolio here.

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About the author:

Holly LaFon
I'm a financial journalist with a Master of Science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


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