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 02/14/2017. 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 2016.
This quarter, Roepers' US long portfolio increased ~6% from $766M to $809M. The number of holdings increased from 15 to 18. The top three holdings are at 47.77% while the top five are at 72.09% of the US long assets: Owens-Illinois, Harman International, CommScope Holding, Diebold Inc. (NYSE:DBD), and Goodyear Tire & Rubber.
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:
Ingram Micro (NYSE:IM): IM was a fairly large 5.47% position as of last quarter. It was established in Q1 2015 at prices between $23 and $27.50. The stake saw a huge ~130% increase the following quarter at prices between $24.50 and $27.50. There was an about turn in Q3 2015: a ~26% combined reduction over three quarters at prices between $24 and $37. Q2 2016 saw another two-thirds reduction at prices between $33 and $36. The disposal this quarter was at prices between $35.50 and $38.50. The stock currently trades at $38.89. Roepers harvested gains.
Alaska Air Group (NYSE:ALK), Robert Half International (NYSE:RHI), and Spirit AeroSystems (NYSE:SPR): These three very small (less than ~1% of the portfolio each) stakes were established in Q2 2016. They were reduced significantly last quarter and disposed of this quarter.New Stakes:
Arris International plc (NASDAQ:ARRS) and Staples, Inc. (NASDAQ:SPLS): These are ~1% positions established this quarter. The ARRS stake was purchased at prices between $26 and $31.50, and the stock is now at $26.26. The SPLS position was established at prices between $7.25 and $10, and it currently goes for $9.08.
Cooper Tire & Rubber (NYSE:CTB), Oshkosh Corp. (NYSE:OSK), Computer Sciences Corp. (NYSE:CSC), and Babcock & Wilcox (NYSE:BW): These four minutely small (less than ~0.5% of the portfolio each) stakes are new this quarter.
Note: Cooper Tire & Rubber is back in the portfolio after a quarter's gap - a small ~1% position established in Q2 2016 was disposed the following quarter.Stake Decreases:
Owens-Illinois (NYSE:OI): OI is Roepers' largest position at 18% 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 at prices between $24 and $35. Q3 2015 saw a ~16% reduction at prices between $19.50 and $23. This quarter saw another ~15% selling at prices between $17 and $19.50. The stock currently trades at $19.99.
Note: A regulatory 13D/A filing last month indicates Roepers' ownership stake has dropped just below the ~5% ownership regulatory threshold for filing that form. The reduction from 8.3M shares to 8.1M shares happened at prices between $17.50 and $19.50.
Harman International (NYSE:HAR): HAR is the second-largest position at ~16% of the US long portfolio. It was established in Q1 2016 at prices between $67 and $96 and tripled the following quarter at prices between $66 and $89. There was a ~25% reduction last quarter at prices between $70 and $88, and that was followed with a ~30% selling this quarter at prices between $77.50 and $111. The stock is now at $111.
Note 1: In November 2016, Samsung Electronics (OTC:SSNLF) agreed to buy Harman International for $112 per share (all cash).
Note 2: HAR has seen a previous roundtrip in the portfolio. It was Roepers' third-largest position at ~18% of the US long portfolio as of Q4 2014. The entire position was eliminated the following quarter at prices between $96 and $143. The original stake was from 2012 with the bulk purchased in Q2 2013 in the mid-40s price range. Roepers harvested huge long-term gains.
Goodyear Tire & Rubber (NYSE:GT): GT is a large (top five) ~11% of the US long portfolio stake. The original position was from Q1 2013 when ~1.2M shares were purchased at prices between $12.50 and $14.50. Q1 2015 saw a huge ~240% increase at prices between $24 and $28.50 and that was followed with a stake doubling the following quarter at prices between $28 and $32.40. There was an about turn in Q3 2015: ~70% combined reduction over the three quarters through Q1 2016 at prices between $26 and $35. There was another ~20% selling this quarter at prices between $27.50 and $33.50. The stock currently trades at $35.50.
Eastman Chemical (NYSE:EMN): EMN is a large ~11% of the 13F portfolio stake established in Q4 2015 at prices between $65 and $74. There was a ~35% increase last quarter at prices between $64 and $72. This quarter saw an about turn: ~40% selling at prices between $63 and $78. The stock currently trades at $80.14.
Triumph Group, Inc. (NYSE:TGI): TGI is fairly large ~8% of the US long portfolio position. It was established in Q4 2013 with the bulk purchased over the next two quarters at prices between $61.50 and $79. Q1 2015 also saw a ~25% increase at prices between $54 and $67. Last three quarters had seen a combined ~37% reduction at prices between $33 and $70. The pattern reversed in Q1 2016: one-third increase at prices between $23.53 and $40.03. The following quarter saw a ~26% selling at prices between $30 and $40. This quarter saw another ~22% reduction at prices between $23 and $30. The stock currently trades at $26.70.
Note 1: Atlantic has a ~4.8% ownership stake in the business and their overall cost basis on TGI is ~$50.
CommScope Holding (NASDAQ:COMM): COMM stake was first purchased in Q2 2016 and increased significantly to a ~1% portfolio position last quarter. This quarter saw a huge increase to a top-three ~14% portfolio stake at prices between $30 and $37.50. The stock is now just above that range at $37.72.
Diebold Nixdorf Inc.: DBD stake was established last quarter. This quarter saw the small ~1% position increased to a large top-five ~13% portfolio stake at prices between $21 and $26. The stock is now well above that range at $30.80.
Magna International (NYSE:MGA) and Asbury Automotive Group (NYSE:ABG): These two very small (less than ~1% of the portfolio each) stakes were established last quarter and increased this quarter. The stakes are still too small to indicate a clear bias.Kept Steady:
The spreadsheet below highlights changes to Roepers' US stock holdings in Q4 2016:
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.
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