We maintain a database of quarterly 13F filings from hundreds of hedge funds and other notable investors, which we use to help us develop investment strategies; for example, we have found that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year. Individual funds’ filings can also be tracked over time, and while we don’t recommend blindly imitating their picks (among other reasons, the information in 13Fs can be outdated by the time these filings occur) we think they can serve similarly to a stock screen in that investors can consider individual names and decide if they are worth a closer look. Read on for our thoughts on the five largest holdings from Chuck Royce’s mutual fund Royce & Associates as of the end of March or see the full list of the fund’s stock picks.
Royce trimmed its stake in Lincoln Electric Holdings, Inc. (NASDAQ:LECO) but still had 7.6 million shares in its portfolio at the beginning of April. Lincoln Electric manufactures and sells welding and cutting products. Its financial reports show essentially flat performance compared to a year ago, but the markets are apparently quite optimistic about the stock: the $5.2 billion market cap represents a trailing P/E multiple of 20. Billionaire Ken Fisher’s Fisher Asset Management owned 1.1 million shares of Lincoln Electric according to its own 13F (find Fisher’s favorite stocks).
The fund increased the size of its position in Nu Skin Enterprises, Inc. (NYSE:NUS), which distributes personal care and nutritional products, to a total of 8.3 million shares. It is a multilevel marketing company, so we’d be a bit concerned about regulation and about the sustainability of growth, but for what it’s worth revenue grew 19% in its last quarterly report compared to the first quarter of 2012 with net income up 14%. Markets have priced in some future growth- the trailing P/E is 21- but analyst forecasts imply a five-year PEG ratio of 0.8.