The following securities represent core holdings in Global Value Investment Corp’s (GVIC) composite of managed accounts as of 06/30/2020. Individual account holdings may differ.
Representative Equity Holdings
Allied Motion Technologies Inc. (AMOT): A US-based industrial automation business engaged in the provision of motion control products, marketed to original equipment manufacturers and end users. The company’s activities include designing, manufacturing, and selling of motors, electronic motion controls, gearing, and optical encoders. AMOT offers brush and brushless DC motors, coreless DC motors, integrated brushless motor-drives, gear motors, gearing, modular digital servo drives, motion controllers, incremental and absolute optical encoders, and associated motion control-related products to several critical and diverse end markets.
Atlas Corp. (ATCO): A globally operated asset manager that owns and operates subsidiary businesses engaged in oceangoing containerized transportation (Seaspan Corporation) and utility-scale customized power solutions (APR Energy). The company’s long-term strategy focuses on deploying capital across multiple verticals to create growth opportunities for its shareholders.
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.
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. In 2018, CMT acquired Horizon Plastics, a Canadian manufacturer of high-strength structural plastic components; the combined company presents attractive synergistic opportunities.
Donnelley Financial Solutions, Inc. (DFIN): A US-based, globally operated provider of compliance and technology solutions focused on capital markets. The company offers comprehensive compliance solutions for investment companies through its FundSuiteArc products and regulatory solutions for publicly traded companies through its ActiveDisclosure product. DFIN also offers data management and analytic services, content management and distribution services, and financial printing services. Capital allocation is focused on improving and expanding SaaS offerings.
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. Widely known 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.
Flexsteel Industries, Inc. (FLXS): A US-based manufacturer of wooden, metal, and upholstered furniture. Under the leadership of new CEO and industry veteran Jerry Dittmer, the company has implemented and is executing a comprehensive turnaround plan. Changes to executive management were recently completed with the announcement of a new CFO, which we view as a positive development. We expect FLXS to recover lost revenue, implement control costs, rationalize its operating footprint, and return to its previous margin profile.
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, re-sulting 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.
Fluor Corporation (FLR): A US-based, globally operated, preeminent provider of engineering, procurement, and construction services. FLR operates through five segments: Energy and Chemicals, Mining and Industrial, Infrastructure and Power, Diversified Services, and Government. Fluor is a well-managed, leading EPC provider and one of only a handful in the world with the scale, technical expertise, and financial wherewithal to undertake large and technically challenging projects. The shares have been depressed due to mismanagement by the former executive management team, which has been replaced.
Gulf Island Fabrication, Inc. (GIFI): A US-based fabricator of complex steel structures, modules and marine vessels, and a provider of project management, hookup, commissioning, repair, maintenance and civil construction services. The company’s customers include U.S. and international energy producers; refining, petrochemical, LNG, industrial, power and marine operators; EPC companies; and the US Government. GIFI has a strong liquidity position after rightsizing its physical footprint, and trades at a substantial discount to net cash per share. Recent changes to the board of directors and executive management will provide fresh perspectives on capital allocation and corporate strategy. We expect continued growth in backlog and improved execution, resulting in meaningful share price appreciation.
Heidrick & Struggles International, Inc. (HSII): A US-based, globally operated leading executive search firm. HSII offers both comprehensive executive search services through its experienced consultants and consulting and culture shaping services through its fledgling Heidrick Consulting division. The company has and continues to invest in an IT infrastructure to support its operations and differentiate its product offering. Returns on invested capital have been notable under the current management team.
Hooker Furniture Corporation (HOFT): A US-based manufacturer and seller of furniture. HOFT sells a wide variety of casegoods and upholstered products. The company maintains a large network of third-party manufacturing partners in Southeast Asia as well as a domestic manufacturing footprint focusing on high-end and custom-made items. HOFT’s customers include independent furniture stores, specialty retailers, department stores, catalog and internet merchants, interior designers, and national and regional chains. HOFT’s ecommerce distribution is well-developed, a reflection of the company’s adaptive corporate strategy. The company is conservatively positioned and pays an attractive dividend.
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. Recently appointed 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.
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 execution issues are fading from the market’s memory, although the company’s capital structure is heavily weighted towards debt. We expect further balance sheet strength-ening as cash flow improves.
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 continues to grow its specialty commercial financing business. Loan loss provisions and actual write-offs are substantially and consistently among the lowest in its peer group. NYCB has resumed growth after several stagnant years, and we remain optimistic about the potential for it to acquire another bank or be acquired after a recent discussion with senior management.
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.
Subsea 7 S.A. (SUBCY): A London, England-based, globally operated company engaged in the provision of engineering and construction services to the offshore oil and gas industry and offshore wind industry. It provides cost-effective technical solutions to enable the delivery of complex projects in all water depths and challenging environments. The Seaway Heavy Lifting and Siem Offshore Contractors subsidiary businesses provide exposure to the growing offshore renewable energy market. Its technology portfolio is among the best in its industry, and its balance sheet has low leverage, leaving it in an enviable position amid the current oil price slump and COVID-19 pandemic.
TravelCenters of America Inc. (TA): A US-based operator and franchisor of travel centers. TA’s products and services include diesel fuel and gasoline, truck repair and maintenance services, full-service restaurants, quick serve restaurants, travel and convenience stores, and various driver amenities. The company operates travel centers under TA, Petro Stopping Centers and TA Express brand names. Its properties are concentrated along the US interstate highway system and larger state highways. In early 2020, TA hired a new CEO and new CFO, who together should bring a fresh perspective on corporate strategy and a renewed focus on cost control and earnings growth. The company’s portfolio of unique assets has substantial intrinsic 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 acquisition of Dielectrics increases exposure to fast-growing medical markets, and we anticipate similar accretive transactions in the future. From a financial standpoint, the business is exceptionally fundamentally sound and there are several obvious avenues to continued growth.
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. WSTG recently completed its first acquisition in more than 25 years, a reflection of the new management team’s focus on expansion. We expect continue organic and inorganic growth, fueled by the company’s robust cash generation, to create substantial long-term value.
Representative Debt Holdings and Characteristics
CoreCivic, Inc. 4.75% Note due 10/15/2027: Core Civic, Inc. operates as a government solutions company engaged in the development and management of correction and reentry facilities as well as government office properties. The company has demonstrated a commitment to ethical operations and focuses on reducing recidivism. CUSIP: 21871NAA9, S&P Rating: BB.
Fluor Corporation 4.25% Notes due 9/15/2028: Fluor Corporation is a preeminent provider of engineering, procurement, and construction services. The company operates through five segments: Energy and Chemicals, Mining and Industrial, Infrastructure and Power, Diversified Services, and Government. Fluor is a well-managed, leading EPC provider and one of only a handful in the world with the scale, technical expertise, and financial wherewithal to undertake large and technically challenging projects. CUSIP: 343412AF9, S&P Rating: BBB-.
GE Capital Corporation Variable Rate Notes due 3/15/2023: GE Capital Corporation is the financial services division of General Electric Company, a large multinational industrial conglomerate with focuses in energy, aviation, and healthcare. CUSIP: 36966THT2, S&P Rating: BBB+.
Owens & Minor, Inc. 4.375% Notes due 12/15/2024: Owens & Minor, Inc. manufactures, sources, and distributes medical and surgical products. Under new leadership, the company has refocused on customer service and logistics. The recent sale of a subsidiary strengthened the company’s capital structure; management has expressed an interest in continuing to deleverage the company. CUSIP: 690732AE2, S&P Rating: B-.
Pitney Bowes Inc. 5.70% Notes due 4/1/2023: Pitney Bowes, Inc. is a technology company engaging in the provision of products and solutions in the commerce industry. Although known for their postage meters, the company has successfully transitioned into a shipping solutions provider integrated into the rapidly growing consumer supply chain and counting numerous large online retailers among its customers. CUSIP: 724479AN0, S&P Rating: BB.
Royal Caribbean Cruises Ltd. 7.50% Notes due 10/15/2027: Royal Caribbean Cruises Ltd. is a globally operated cruise vacation company. Operations are concentrated in North America, but through a portfolio of brands, the company cruises in a variety of locations around the world. While the COVID-19 pandemic has halted operations, Royal Caribbean has been active in capital markets to shore up liquidity. CUSIP: 780153AG7, S&P Rating: BBB-.
Royal Caribbean Cruises Ltd. 5.25% Notes due 11/15/2022: Royal Caribbean Cruises Ltd. is a globally operated cruise vacation company. Operations are concentrated in North America, but through a portfolio of brands, the company cruises in a variety of locations around the world. While the COVID-19 pandemic has halted operations, Royal Caribbean has been active in capital markets to shore up liquidity. CUSIP: 780153AU6, S&P Rating: BBB-.
Under Armour, Inc. 3.25% Notes due 6/15/2026: Under Armour, Inc. designs, markets, and distributes branded apparel, footwear, and accessories with a focus on athletics and athleisure markets. The company was conservatively leveraged going into the COVID-19 pandemic, but has borrowed recently to fund operations while many of its stores remain closed and it navigates a restructuring plan. Credit metrics remain strong. CUSIP 904311AA5, S&P Rating: BB.
United States Treasury 0.375% Notes due 1/15/2027 (TIPS): This inflation-linked security provides a hedge against inflation while paying a modest coupon. As a general obligation of the United States Government, credit risk is minimal. CUISIP: 912828V49, S&P Rating: AAA.
United States Treasury 1.75% Notes due 1/15/2028 (TIPS): This inflation-linked security provides a hedge against inflation while paying a modest coupon. As a general obligation of the United States Government, credit risk is minimal. CUISIP: 912810PV4, S&P 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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