This article is part of a series that provides an ongoing analysis of the changes made to Alex Roepers' US stock portfolio on a quarterly basis. It is based on Roepers' regulatory 13F Form filed on 02/16/2016. Please visit our Tracking Alex Roepers' Atlantic Investment Management Portfolio article for an idea on his investment philosophy and our last update for the fund's moves during Q3 2015.
This quarter, Roepers' US long portfolio decreased 7.89% from $1.05B to $968M. The number of holdings decreased from 18 to 17: several minor positions were eliminated and new ones added. The top three holdings are at 52.07% while the top five holdings are at 78.22% of the US long assets: Owens Illinois, Goodyear Tire & Rubber, Ingram Micro, FMC Corporation, and Triumph Group.
Atlantic Investment Management's annualized returns since 1993 are impressive at ~20%. To know more about activist investing, check out Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations.Stake Disposals:
Wesco International (NYSE:WCC): WCC was a fairly large 9.23% stake. It was established in Q1 2015 at prices between $65.80 and $76.21 and increased by ~125% the following quarter at prices between $68.50 and $74.19. The entire position was sold this quarter at prices between $40 and $52. The stock is now at $42.80. Roepers realized losses from this position.
Anixter International (NYSE:AXE), Direxion CSI 300 China Bear 1x (NYSEARCA:CHAD), Flextronics International (NASDAQ:FLEX), Huntington Ingalls Inds. (NYSE:HII), Norfolk Southern (NYSE:NSC), and Tata Motors (NYSE:TTM): These small (less than ~1% of the portfolio each) positions were eliminated this quarter. All except AXE were purchased last quarter. The AXE position was from Q1 2014.New Stakes:
Eastman Chemical (NYSE:EMN): EMN is a large 11.93% of the 13F portfolio stake established this quarter at prices between $65 and $74. The stock currently trades below that range at $62.40.
Hewlett Packard Enterprise (NYSE:HPE), KLX Inc. (KLX), Kirby Corp. (NYSE:KEX), SPX Flow Inc. (NYSE:FLOW), and UniFirst Corporation (NYSE:UNF): These are very small (less than ~1% of the portfolio each) positions established this quarter.
Note: HPE is a November 2015 spinoff of Hewlett Packard's (NYSE:HPQ) Enterprise business. KLXI was spun off from B/E Aerospace (NASDAQ:BEAV) in December 2014. FLOW is a September 2015 spinoff from SPX Corporation (NYSE:SPXC).Stake Decreases:
American Axle & Manufacturing (NYSE:AXL): AXL is a small 1.15% of the US long portfolio position. It was first purchased in Q1 2014 and doubled the following quarter at prices between $17 and $21. Q4 2014 saw a reversal: ~7% reduction at prices between $16.40 and $22.79. The selling accelerated the following quarter: ~43% decrease at prices between $22.20 and $25.86. Last three quarters have seen only marginal activity. The stock currently trades at $14.43.
FMC Corp (NYSE:FMC): FMC is a large (top five) 13.96% of the portfolio stake. It was established in Q4 2014 at prices between $51.60 and $58.96 and increased by ~170% the following quarter at prices between $55.72 and $64.59. Q2 2015 saw a further ~38% increase at prices between $51.77 and $60.95. This quarter saw an about-turn: ~35% reduction at prices between $34 and $43. The stock currently trades at $35.95.
Note: FMC was previously purchased in 2009 in the low-20s. It was a huge ~13% stake. That position was eliminated in 2011 in the low-40s.
Goodyear Tire & Rubber (NASDAQ:GT): GT is a large (top-three) 16.93% of the US long portfolio stake. The original position is from Q1 2013 when ~1.2M shares were purchased at prices between $12.50 and $14.50. Q1 2015 saw a huge ~242% increase at prices between $23.97 and $28.58 and that was followed with a ~95% increase the following quarter at prices between $28 and $32.40. Last quarter saw a ~24% reduction at prices between $27.83 and $32.66 and that was followed with a ~11% reduction this quarter at prices between $29 and $35. The stock currently trades at $29.61. Roepers is harvesting gains from this position.
Lear Corporation (NYSE:LEA): LEA is a 0.93% of the portfolio position established in Q4 2014 at prices between $78.22 and $98.42. This quarter saw a ~43% reduction at prices between $109 and $126. The stock currently trades at $103.
Note: LEA has seen some activist involvement recently. Mick McGuire of Marcato Capital has built a huge ~11% of portfolio stake (~3.6M shares, 4.6% of business). He has called to split LEA into seating and electrical businesses.
Triumph Group Inc. (NYSE:TGI): TGI is Roepers' fifth-largest position at 12.19% of the US long portfolio. It was established in Q4 2013 with the bulk purchased over the next two quarters at prices between $61.52 and $78.97. Q1 2015 also saw a ~25% increase at prices between $53.96 and $66.75. Last two quarters had seen a combined ~20% reduction at prices between $41.59 and $66.19 and that was followed with another ~21% reduction this quarter at prices between $33 and $47. The stock currently trades at $27.39. Roepers controls ~6 % of the business.
Crane Co. (NYSE:CR), CSX Corp. (NASDAQ:CSX), Magna International (NYSE:MGA), and Oshkosh Corp. (NYSE:OSK): These are very small ~1% stakes that saw reductions this quarter. CR, CSX, and OSK positions were established last quarter while the MGA stake is from Q1 2015.Stake Increases:
Ingram Micro (NYSE:IM): IM is a large (top three) 14.18% position. It was established in Q1 2015 at prices between $23.04 and $27.64. The stake saw a huge ~134% increase the following quarter at prices between $24.67 and $27.26. Last quarter saw a ~17% reduction at prices between $24.07 and $27.70. The stock currently trades at $36.31. This quarter saw a ~9% further increase. Roepers controls ~3% of the business.
Owens Illinois (NYSE:OI): OI is Roepers' largest position at 20.96% of the US long portfolio. It is a very long-term stake. In 2008, the position was minutely small and was built up to 11.2M shares by 2012 through consistent buying. 2013 saw an about turn as ~40% of the stake was sold. In 2014, the position was built back up to 12.2M shares (~7.6% of business) at prices between $24 and $35. Last quarter had seen a ~16% reduction at prices between $19.42 and $22.94. The stock currently trades at $14.06. This quarter saw a ~9% increase at prices between $17 and $24. Roepers controls ~7.2% of the business.Kept Steady:
The spreadsheet below highlights changes to Roepers' US stock holdings in Q4 2015:
Disclosure: I am/we are long OI.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.