The following securities represent core holdings in Global Value Investment Corp’s (GVIC) composite of managed accounts as of 12/31/2019. Individual account holdings may differ.
Representative Equity Holdings
AutoWeb, Inc. (AUTO) A US-based automotive marketing services company providing high-quality consumer leads, internet advertising, and associated marketing services to automotive dealers and manufacturers throughout the United States. The company’s products include new and used vehicle lead generation programs, which allow consumers to submit requests for pricing and availability of specific vehicle makes and models within a geographic area, and online advertising programs including impression-based and click-through ads. Management has developed and is executing a strategic plan that we expect will lead to meaningful value creation. A normalization of revenues and margins should cause AUTO to trade in line with historic multiples. The share price remains well below our appraised value.
Core Molding Technologies, Inc. (CMT) A US-based manufacturer of sheet molding compound and various fiberglass- and plastic-based heat-molded products. The company’s customers include manufacturers of heavy-duty trucks, automobiles, personal recreational vehicles, and a variety of consumer and industrial goods that incorporate high-strength molded components. CMT recent acquired Horizon Plastics, a Canadian manufacturer of high-strength structural plastic components; the combined company presents attractive synergistic opportunities. CEO David Duvall is leading an operational turnaround that focuses heavily on manufacturing efficiencies; early results are evident. The company has operations throughout North America. The share price remains well below our appraised value.
Corning Incorporated (GLW) A US-based global manufacturing business that produces display glass, fiber optic cables, emission control products, medical and pharmaceutical equipment, and specialty glass. Widelyknown products include Gorilla Glass, a durable display glass used in mobile electronic devices, and Valor Glass pharmaceutical vials, in which the company is investing heavily. GLW is among the foremost providers of fiber optic cables, which will play an increasingly important role in continuing development of global telecommunication infrastructure. GLW’s business has improved over the past few years, narrowing its market value compared to our appraised value, but growth opportunities remain.
Flexsteel Industries, Inc. (FLXS) A US-based manufacturer of wooden, metal, and upholstered furniture. Short-term trade concerns and disruptions stemming from the partial implementation of a new business information system have caused consternation among market participants. The company has implemented and is executing a comprehensive turnaround plan. We expect FLXS to recover lost revenue, implement control costs, rationalize its operating footprint, and return to its previous margin profile. The company has a strong cash position and no debt. New CEO Jerry Dittmer brings significant industry experience and managerial knowledge. FLXS will continue to play a role in fulfilling the need for furniture across a range of price points while adapting to changing customer preferences. The share price remains well below our appraised value.
Fluent, Inc. (FLNT) A US-based digital marketing business offering performance-based marketing solutions through targeted digital interactions. FLNT is growing rapidly, and we anticipate that investors will soon appreciate the business’s healthy margins and cash generation potential, resulting in significant price appreciation. Excesses cash from operations may be used to prepay debt or for accretive acquisitions. The company possesses a desirable competitive position, unique products, and a young and innovative workforce. We maintain a high degree of confidence in Fluent’s management team. The share price remains well below our appraised value.
Gulf Island Fabrication, Inc. (GIFI) A US-based fabricator of complex steel structures for customers in the oil and gas industry. GIFI also fabricates marine vessels, including tugboats, offshore supply vessels, civilian transportation vessels, and government vessels. The company is well-positioned to participate in a developing US offshore wind energy market and the ongoing development of petrochemical processing capacity on the US Gulf Coast. GIFI has a strong liquidity position after rightsizing its physical footprint, and trades at only a slight premium to net cash per share. Recent changes to the board of directors and executive management will provide fresh perspectives on capital allocation commensurate with GIFI’s fluid end markets. We expect continued growth in backlog and improved execution will result in meaningful price appreciation. The share price remains well below our appraised value.
Kraft Heinz Company (KHC) A US-based diversified manufacturer and marketer of food and beverages products. In 2015, Warren Buffett’s Berkshire Hathaway and investment firm 3G Capital orchestrated the merger of Kraft Foods and H.J. Heinz; the two investment firms hold a combined equity position in KHC of nearly 50%. Aggressive cost cutting after the merger led to an underinvestment in legacy brands, resulting in an impairment of goodwill in early 2019. Market sentiment is decidedly negative, but we believe KHC’s business is fundamentally sound. New CEO Miguel Patricio has taken a measured approach to brand development and rationalizing KHC’s product portfolio, which we expect to be a catalyst to value creation. The share price remains well below our appraised value.
LSB Industries, Inc. (LXU) A US-based producer of nitrogen-based agriculture and industrial products at three owned facilities and one non-owned staffed plant. Ongoing changes to operational and maintenance procedures have meaningfully improved onstream rates. Growth opportunities exist in both the cyclical agricultural fertilizer segment and the high-margin industrial and mining segment. Historical executional issues are fading from the market’s memory, although the company’s capital structure is heavily weighted towards debt. We expect further balance sheet strengthening as cash flow improves. Coupled with continued operational reliability, this should lead to significant stock price appreciation. The share price remains well below our appraised value.
New York Community Bank, Inc. (NYCB) A US-based mid-tier consumer and commercial bank offering deposit and loan products and services. NYCB has established a niche lending position in the rent-controlled multi-family housing market in New York City and has recently shown growth in its specialty commercial financing business. Loan loss provisions and actual write-offs are substantially and consistently among the lowest in its peer group. Recently legislation raised the threshold that defines a Systematically Important Financial Institution (SIFI) from $50 billion to $250 billion. NYCB has resumed growth after several stagnant years and we remain optimistic about the potential for it to acquire another bank or be acquired. The share price remains below our appraised value.
Seaspan Corporation (SSW) A Hong Kong-based, globally operated independent owner and manager of oceangoing container ships which are chartered on long-term, fixed-rate time charters to various established container liner companies. Market recovery from a period of depressed charter rates due to an oversupply of vessels is underway. We believe industry and economic conditions remain favorable in the medium- to long-term. SSW recently announced the acquisition of APR Energy, a global leader in specialized power solutions; we believe the combination is sensible and will be accretive to shareholders. SSW is planning to convert to a holding company structure and adopt the corporate name “Atlas Corp.” to reflect its newly diversified business structure. The share price remains below our appraised value.
StealthGas Inc. (GASS) An Athens, Greece-based, globally operated shipping company that provides seaborne transportation of liquified petroleum gas (LPG). GASS is dominant in the small-sized pressurized LPG shipping market, which continues to improve with accelerating demand for product transportation and a favorable outlook for global fleet growth in the segment. We believe GASS is trading at an attractive discount to net asset value and has significant appreciation potential. The share price remains well below our appraised value.
Subsea 7 S.A. (SUBCY) A London, England-based, globally operated company providing seabed-to-surface engineering, construction, and services to the offshore energy industry. SUBCY’s stock was disproportionately discounted during a period of reduced offshore oil and gas exploration and production activity but has benefitted from improving markets and normalizing capital expenditures by its customers. The acquisitions of Seaway Heavy Lifting and Siem Offshore Contractors have provided exposure to the growing offshore renewable energy market. SUBCY’s technology portfolio is among the best in its industry, and its balance sheet is nearly debt-free. The share price remains below our appraised value.
TravelCenters of America Inc. (TA) A US-based business that owns, operates, and franchises travel centers offering refueling, dining, and ancillary travel services to truckers and motorists. Properties are concentrated along the US interstate highway system and larger state highways. A renewed focus on expansion through franchising coupled with improvements in servicing capabilities position the company for revenue growth and margin improvement. The company’s portfolio of unique assets has substantial intrinsic value. A recent management change was received enthusiastically by shareholders. The share price remains below our appraised value.
UFP Technologies, Inc. (UFPT) A US-based designer, engineer, and producer of high-grade foam and molded fiber solutions for electronic, medical, and specialty packaged products. A disciplined management team has consistently executed on growth and efficiency initiatives, driving long-term shareholder value. The recent acquisition of Dielectrics increases exposure to fast-growing medical markets, and we anticipate similar accretive transactions in the future. We believe there is additional share price appreciation potential.
Wayside Technology Group, Inc. (WSTG) A US-based, globally operated technology wholesale company that distributes computer software and hardware developed by others, as well as provides technical and related customer services. Top-line growth has been consistent but net margins have been compressed. Changes implemented by management hired within the past two years are beginning to bear fruit, and we expect bottom-line growth continue and accelerate. The share price remains below our appraised value.
Representative Fixed Income Holdings
CoreCivic Inc. (21871NAA9)
Coupon Rate: 4.75%
Maturity Date: 10/15/1027
Credit Rating: BB
GE Capital Corporation (36966THT2)
Coupon Rate: Variable
Maturity Date: 03/15/2023
Credit Rating: BBB+
Kraft Heinz Food Co. (50077LAD8)
Coupon Rate: 3.00%
Maturity Date: 06/01/2026
Credit Rating: BBB-
Owens & Minor, Inc. (690732AE2)
Coupon Rate: 4.375%
Maturity Date: 12/15/2024
Credit Rating: B
Pitney Bowes Inc. (724479AN0)
Coupon Rate: 5.20%
Maturity Date: 04/01/2023
Credit Rating: BB
Trinity Industries, Inc. (896522AH2)
Coupon Rate: 4.55%
Maturity Date: 10/01/2024
Credit Rating: BBB-
United States TIPS (912828V49)
Coupon Rate: 0.375%
Maturity Date: 01/15/2027
Credit Rating: AAA
United States TIPS (912810PV4)
Coupon Rate: 1.75%
Maturity Date: 01/15/2028
Credit Rating: AAA
Global Value Investment Corp. (GVIC) has prepared the information on this page from sources and data believed to be reliable, but makes no representation as to its accuracy or completeness. The securities mentioned above are provided for information purposes only and are only current as of the date indicated above. Due to various factors, including changing market conditions, the securities listed may no longer be reflective of the current securities recommended by GVIC, and are subject to change without prior notice.
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