A Day in the Life of a Value Investor
You never know where the exciting life of a value investor might take you.
Friday morning I was just checking the morning news on Seeking Alpha, and I noticed one story was a change in management at a small company called Astec Industries ASTE - $37. The CEO left unexpectedly, and an internal replacement was named.
ASTE makes road paving equipment. I had done some work on the stock 20 years ago and passed. Every time I drive by a site where they are laying new asphalt I check the brand name on the machine (ASTE has a white machine with the brand name Roadtec). ASTE has a good market share in the Southeast, but not much everywhere else.
Upon a quick review I found ASTE to be an interesting idea because backlog is up significantly, but supply chain issues have hurt recent results. Maybe this is why the CEO left, or was fired, or maybe he left for family reasons. I will wait for the next quarter, and see if any additional news comes out.
ASTE is an interesting investment idea because the company is unique. It is hard to compare ASTE to any other public company. You can call them “one off” or unique, or just plain strange. There are hundreds of these companies that do not fit easily into an industry like utilities or restaurants. These unique companies can be a good source of value because Wall Street sometimes ignores them. One day I was going to write a separate post about how to analyze these companies, and then something interesting happened.
When I looked at the large owners of ASTE I saw a name I did not know, Victory Capital Management. I know the name of most guys that own a stock like ASTE, but this name was new. So I did a little digging, and it turns out the Victory Capital is actually a public company VCTR - $28, that has rolled up 12 different investment managers into a miniature Affiliated Managers - AMG. One of the twelve is Sycamore Capital of Cincinnati. These guys run an amazing mid-cap value fund called Victory Sycamore Small Cap Opportunity Fund, symbol VSOIX. It is one of the best funds I have ever come across. It owns 100 stocks just like ASTE, unique and a little quirky.
The fund owns too many stocks (102), but they do this to allow the fund to be larger. They also own a few too many financial stocks, but even these are interesting. This is a great list of stocks. I looked through 50 stocks, and not one was a name I hated, and I hate a lot of stocks. I could spend the rest of the year looking at just the stocks in this portfolio. Let’s list ten just for fun:
TriMas - TRS - a unique maker of dispensing equipment
Hologic - HOLX - a maker of drugs for women’s issues
Xylem - XLM - the water equipment maker
MKS Instruments - MKSI - test equipment
Westlake - WLK - a neat specialty chemical maker
Maximus - MMS - a government outsourcer
Steel Dynamics - STLD - a great mini-mill
Landstar System - a great asset-light trucker
Delek US - four small town refineries
Kaiser Aluminum - an interesting aluminum extruder
If you really know anything about 2, or more, of these companies, go buy your an ice cream cone and send me the bill.
It was just a sleepy Friday morning, and now I have 100 great investment ideas to think about.