Tracking Alex Roepers' Atlantic Investment Management Portfolio - Q2 2015 Update

|
Includes: ACM, ALK, AXE, AXL, BGC, CVEO, CYT, FMC, GT, HSC, IM, LEA, MGA, OI, OIS, TEX, TGI, TKR, WCC
by: John Vincent
Summary

Atlantic Investment Management’s 13F portfolio increased from $1.33B to $1.44B. The number of positions decreased from 18 to 13.

Alex Roepers substantially increased FMC Corporation, Goodyear Tire & Rubber, Ingram Micro, and Wesco International while dropping Oil States International.

The top-three positions are Owens Illinois, Triumph Group, and FMC Corporation and they add up to almost ~59% of the portfolio.

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 08/17/2015. Please visit our Tracking Alex Roepers' Atlantic Investment Management Portfolio article for an idea on his investment philosophy and the fund's moves during Q1 2015. Atlantic Investment Management's annualized returns since 1993 are impressive at ~20%.

This quarter, Roepers' US long portfolio increased 8.58% from $1.33B to $1.44B. The number of holdings decreased from 18 to 13: a large top-five stake in Oil States International and four other small positions were dropped this quarter. The top three holdings are at 58.62% while the top five holdings are close to 85% of the US long assets: Owens Illinois, Triumph Group, FMC Corporation, Goodyear Tire & Rubber and Wesco International.

Stake Disposals:

Oil States International (NYSE:OIS): OIS was a large (top-five) ~10% of the US long portfolio stake as of last quarter. The entire stake was eliminated this quarter at prices between $36.87 and $47.59. The stake had seen consistent buying since it was first purchased in 2012 at a mid-70s cost-basis. It was increased by ~30% in Q4 2014 at prices between $42.42 and $61.90 and another ~14% last quarter at prices between $38.80 and $48.90. The stock currently trades at $23.60.

Note: The prices quoted for OIS understates the implied performance of this stake due to the effect of the spinoff of Civeo (NYSE:CVEO) from OIS in June 2014. OIS shareholders received two shares of CVEO for each share of OIS held.

Cytec Industries (NYSE:CYT): CYT was a very small 0.97% of the US long portfolio stake as of last quarter. It was eliminated this quarter at prices between $53.42 and $62.62. The original position was from 2013 with the bulk purchased in Q3 2014 at prices between $47.53 and $53.88. Last quarter had seen a ~44% reduction at prices between $42.99 and $54.14. The stock currently trades at $72.50.

Note: Solvay SA agreed to buy Cytec Industries in a $75.25 cash deal last month.

General Cable Corporation (NYSE:BGC): BGC was a small 1.24% of the US long portfolio position. It was first purchased in Q1 2014 at prices between $25.53 and $31.08. Q3 2014 saw a huge ~83% increase at prices between $15.08 and $26.18. Last quarter, the stake was sold down by ~47% at prices between $11 and $17.73 and this quarter the remaining position was sold at prices between $16.24 and $21.10. The stock currently trades at $13.42.

Harsco Corporation (NYSE:HSC): HSC was a small 1.22% of the US long portfolio stake as of last quarter. Last two quarters had seen a ~12% increase at prices between $14.76 and $21.68. The elimination this quarter happened at prices between $15.46 and $17.49. The stock currently trades at $11.22. The original stake was from Q1 2014 when it was purchased at prices between $21.46 and $27.98.

Timken Company (NYSE:TKR): This was a very small ~1% stake established last quarter at prices between $38 and $44 and dropped this quarter at prices between $36.30 and $42.88. The stock currently trades at $29.97.

New Stakes:

None.

Stake Decreases:

Triumph Group Inc. (NYSE:TGI): TGI is Roepers' second-largest position at 19.34% 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. Last quarter saw a ~25% increase at prices between $53.96 and $66.75. There was a ~10% trimming this quarter. The stock currently trades below his purchase-price-ranges at $49.51. Roepers controls ~8.6% of the business.

Note: In October 2014, Roepers pitched TGI at the Capitalize for Kids Sohn Canada conference, putting a price-target of $100 within 24 months.

Alaska Air Group (NYSE:ALK): A 1.41% ALK position was purchased in Q4 2014 at prices between $41.58 and $59.76. It was reduced by ~11% last quarter at prices between $58.77 and $71.07 and almost eliminated this quarter at prices between $60.65 and $68.30. The stock currently trades at $73.10.

American Axle & Manufacturing (NYSE:AXL): AXL is a small 0.90% 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 last quarter: ~43% decrease at prices between $22.20 and $25.86. This quarter saw a marginal further reduction. The stock currently trades at $19.07.

Lear Corporation (NYSE:LEA): LEA is a ~1% of the portfolio position established in Q4 2014 at prices between $78.22 and $98.42. Last quarter saw a minor increase while this quarter saw marginal selling. The stock currently trades at $95.73.

Note 2: 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.

Terex Corporation (NYSE:TEX): TEX is a small 1.46% of the US long portfolio position. The stake was established in Q2 2014 at prices between $40.28 and $44.30 and increased by ~180% the following quarter at prices between $31.77 and $42.31. The stock currently trades at $21.03. This quarter saw a minor ~7% reduction.

Magna International (NYSE:MGA): MGA is a very small ~1% position established last quarter at prices between $46 and $55. The stock currently trades at $46.97. This quarter saw a very minor ~3% trimming.

Stake Increases:

FMC Corp (NYSE:FMC): FMC is a top-three 19.07% stake. It was established in Q4 2014 at prices between $51.60 and $58.96 and increased by ~170% last quarter at prices between $55.72 and $64.59. This quarter saw a further ~38% increase at prices between $51.77 and $60.95. The stock currently trades at $43.14. Roepers controls ~3.9% of the business. For investors attempting to follow Roepers, FMC is a good option to consider for further research.

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-five) 15.47% 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. Last quarter saw a huge ~242% increase at prices between $23.97 and $28.58 and that was followed with a ~95% increase this quarter at prices between $28 and $32.40. The stock currently trades at $28.09. Roepers controls ~2.8% of the business.

Ingram Micro (NYSE:IM): IM is a fairly large 8.71% position. It was established last quarter at prices between $23.04 and $27.64. The stake saw a huge ~134% increase this quarter at prices between $24.67 and $27.26. The stock currently trades at $26.57. Roepers controls ~3.2% of the business.

Owens Illinois (NYSE:OI): OI is Roepers' largest position at 20.21% 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. Q4 2014 saw a ~10% increase at prices between $23.53 and $27.29. Last two quarters have also seen minor further buying. The stock currently trades at $19.74. Roepers controls ~7.9% of the business.

Note: In the Capitalize for Kids Sohn Canada conference in October 2014, Roepers pitched the stock and put a price target of $45 within 12 months ($3.25 EPS projection for 2015).

Wesco International (NYSE:WCC): WCC is a large 10.69% stake. It was established last quarter at prices between $65.80 and $76.21 and increased by ~125% this quarter at prices between $68.50 and $74.19. The stock is now well below those ranges at $51.92. Roepers controls ~5.2% of the business. For investors attempting to follow Roepers, WCC is a very good option to consider for further research.

Aecom (NYSE:ACM) and Anixter International (NYSE:AXE): These are very small (less than ~1% of the portfolio each) positions established last quarter and increased this quarter. The position sizes are still too small to indicate a clear bias.

Kept Steady:

None.

The spreadsheet below highlights changes to Roepers' US stock holdings in Q2 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.