Alex Roepers Atlantic Investment Management Portfolio Update

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This article is part of a series that provides ongoing analysis of changes to Alex Roepers’ 13F portfolio on a quarterly basis. It is based on Roepers’ regulatory Form 13F filed on 2022-02-14. Please visit our Alex Roepers Atlantic Investment Management portfolio monitoring article to get an idea of ​​his investment philosophy and our Last update for fund movements during the third quarter of 2021.

This quarter, the value of Roepers’ 13F portfolio has grown from about $298 million to about $358 million. The number of holdings has shrunk from 11 to 10. The top three holdings represent about 46%, while the top five represent about 70% of 13F assets: Huntsman Corp., Univar Solutions, Eastman Chemical, WestRock Company and Avnet.

Atlantic Investment Management’s annualized returns from the flagship fund’s inception in 1992 through 2017 have been impressive at around 16%. For the past four years, the fund has underperformed the S&P 500 Index. For more on activist investing, see Deep Value: Why Activist Investors and Other Opponents Fight for Control of Losing Companies.

New issues:

Timken Corporation (TKR): TKR represents 7.52% of the portfolio position established this quarter at prices between ~$64 and ~$77 and the stock is currently trading just below that range at $62.41.

Sale of interests:

Berry Global (BERY): BERY represented a significant 8.85% stake in the portfolio established in Q2 2021 at prices between ~$61 and ~$71. A third sold last quarter at prices between ~$60 and ~$69. The divestment this quarter was at prices between ~$60 and ~$74. The stock is now at $56.76.

FirstSource Builders (BLDR): The 1.74% stake in BLDR was purchased last quarter at prices between ~$40.50 and ~$55. The position was sold this quarter at prices between ~$52 and ~$86. The stock is currently trading at $73.85.

Bet increase:

Eastman Chemical (EMN): EMN was a large holding established in Q4 2015 at prices between $65 and $74. The position has since been liquidated. Recent activity follows: it was rebuilt in the first quarter of 2019 at prices between $71 and $85. The second half of 2019 had seen around 45% selling at prices between $61.50 and $83.90. This was followed by another sale of around 75% in the first quarter of 2020 at prices between $38 and $79. The position was replenished this quarter at prices between ~$101 and ~$121. The stock is now at ~$109 and the stake is at ~14% of the portfolio.

WestRock Co (WRK): WRK is a large position (top five) at 13.52% of the portfolio. It was built in Q4 2019 at prices between $33.50 and $43.25. The first quarter of 2020 saw a sale of around 17% while the following quarter saw a two-thirds increase at prices between $24 and $34. The fourth quarter of 2020 saw a reduction of around 10% while the following quarter there was an increase in participation of around 20% at prices between ~$41 and ~$54. The past two quarters had seen around 22% selling at prices between ~$48 and ~$62. This quarter saw an increase in participation of approximately 15%. The stock is currently at $42.49.

Avnet Inc. (AVT): AVT’s large ~10% stake was purchased in Q4 2020 at prices between ~$24.50 and ~$35.25. There was a roughly 30% stake increase in the next quarter at prices between ~$35 and ~$41.50. The stock is now at $39.83. This quarter also saw an increase in participation of approximately 11%.

Nomadic Foods (NOMD): NOMD is a 1.72% position established over the past two quarters at prices between ~$24 and ~$29 and the stock is currently trading well below that range at $20.85.

Note: Nomad Foods is back in the portfolio after a quarter of a gap. A similar stake was established in Q4 2020 at prices between ~$22.60 and ~$26.15. It was phased out the following quarter at prices between ~$27.50 and ~$31.50.

The bet decreases:

Huntsman Corp (HUN): HUN is currently the largest position with around 17% of the portfolio. It was established in the first quarter of 2021 at prices between ~$25 and ~$29.50. Stake more than doubled in the following quarter at prices between ~$25 and ~$31.60. The stock is currently trading at $36.96. There has been a reduction of about 15% in the last two quarters.

Note: Huntsman is a frequently traded pick in the wallet. Details of the latest round trip follow: it was about 5% of the portfolio stake established in the second quarter of 2017 at prices between $23 and $27. The five quarters up to the second quarter of 2019 had seen a combined sale of around 50% at prices between $17.35 and $35.30. This was followed by another two-thirds selling the following quarter at prices between $18.25 and $23.50. The fourth quarter of 2019 saw the position nearly eliminated at prices between $21.50 and $25. The remaining stake was sold in the first half of 2020.

Univar Solutions (UNVR): The large (top three) ~15% portfolio stake in UNVR was established in Q2 2020 at prices between $9.60 and $18.15. The two quarters through Q1 2021 had seen a one-third increase in stake at prices between ~$16.50 and ~$22. The stock is currently trading at $29.52. There was a reduction of about 9% this quarter.

Goodyear (GT) tires and rubber: GT represents approximately 10% of the portfolio position purchased last quarter at prices between ~$14.50 and ~$18.75. The stock is currently trading below that range at $13.13. This quarter saw a cut of around 5%.

Lear Corp. (LEA): LEA represents approximately 9% of the portfolio position established in Q4 2020 at prices between ~$113 and ~$165 and the stock is currently trading at ~$141. The last three quarters had seen only minor adjustments. There was a ~12% cut this quarter at prices between ~$146 and ~$188.

Maintained stable:

Glass RO (RO) formerly Owens Illinois: OI is a very long-term issue. In 2008 the position was tiny and was built to 11.2 million shares in 2012 through regular buying. Recent activity follows: from the second to the fourth quarter of 2019, the stake increased by approximately 85% at prices between $8.50 and $20. The first half of 2020 saw around 35% selling at prices between $4.65 and $14.85. This was followed by a roughly 45% reduction in Q4 2020 at prices between ~$9.40 and ~$13. The two quarters through Q2 2021 had seen around 75% more sold at prices between $11.50 and $19.30. The stock is currently trading at $12.10 and the stake is 2.20% of the portfolio.

The spreadsheet below highlights changes to Roepers’ 13F stock holdings in Q4 2021:

spreadsheet highlighting changes to Roepers

Alex Roepers – Atlantic Investment Management Q4 2021 13F Report Q/Q Comparison (John Vincent (author))

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