The following securities represent core holdings in Global Value Investment Corp’s (GVIC) composite of managed accounts as of 09/30/2019. 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. 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. 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 offshore steel structures for customers in the oil and gas and other marine industries. 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 a renaissance in petrochemical processing 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. 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. At current prices, the dividend yield is over 5%. 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 domestic 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 rent-controlled residential multi-family housing buildings 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 begun growing after several stagnant years and 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. As new management continues to reshape the balance sheet, we anticipate strategic acquisitions. 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 gas shipping market. The LPG shipping market 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 well below our appraised value.
TravelCenters of America LLC (TA)
A US-based business operating and franchising North American highway system travel centers with fuel and convenience store services for business and casual travelers. Expansion of the core travel centers business 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. 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. UFPT recently completed a reorganization of its production assets to more efficiently serve its growing customer base in a highly fragmented industry. Management has executed on its plant consolidation and rationalization plan, and in the process continued to drive shareholder value. The recent acquisition of Dielectrics increases exposure to fast-growing medical markets. We believe there is additional share price appreciation potential.
Wayside Technology Group, Inc. (WSTG)
A US-based, globally-operated technology wholesale company that resells 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. We believe recent management changes and an associated revitalization of the sales organization will be accretive to the bottom line. The share price remains below our appraised value.
Representative Fixed Income Holdings
GE Capital Corporation (36966THT2)
Coupon Rate: Variable
Maturity Date: 03/15/2023
S&P Rating: BBB+
Kraft Heinz Food Co. (50077LAD8)
Coupon Rate: 3.00%
Maturity Date: 06/01/2026
S&P Rating: BBB-
Owens & Minor, Inc. (690732AE2)
Coupon Rate: 4.375%
Maturity Date: 12/15/2024
S&P Rating: B
Pitney Bowes Inc. (724479AN0)
Coupon Rate: 5.20%
Maturity Date: 04/01/2023
S&P Rating: BB+
Trinity Industries, Inc. (896522AH2)
Coupon Rate: 4.55%
Maturity Date: 10/01/2024
S&P Rating: BBB-
United States TIPS (912828V49)
Coupon Rate: 0.375%
Maturity Date: 01/15/2027
S&P Rating: AAA
United States TIPS (912810PV4)
Coupon Rate: 1.75%
Maturity Date: 01/15/2028
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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