Royce Nears 6% Ownership of Seacor Holdings

According to a 13G filed with the SEC, Royce & Associates owns almost 1,250,000 shares of Seacor Holdings, Inc. (NYSE:CKH). Seacor is a $1.8 billion market cap marine transportation company operating a portfolio of assets including offshore supply vessels, tugboats and pushboats, and tank barges. The stock is down 5% in the last year against a rising market, and down 17% in the last two years. Royce & Associates is a fund managed by Chuck Royce which tends to focus on small-cap and large-cap companies, even if the smaller size of these companies forces the fund to take a large percentage stake. In this case, Royce now owns almost 6% of Seacor’s outstanding shares. See more of Royce’s stock picks; earlier this month, we recorded filings from Royce disclosing larger positions in Enersys, Brady Corp, and Molex.

Seacor’s revenue was down in the third quarter of 2012 from the same period in the previous year, but this was entirely due to lower revenues from commodity trading related businesses; the company’s core transportation business actually improved. Seacor Holdings, Inc. was also able to reduce its operating costs with the result being a 22% increase in operating income. The company experienced an even higher growth rate in terms of earnings, reporting $16 million in net income versus $4 million a year earlier. This built on a successful first half of the year, resulting in earnings more than doubling in the first nine months of 2012 compared to the first nine months of 2011.

The financial community appears bullish on Seacor Holdings, Inc.- the sell-side perhaps a bit more so than the markets. The trailing P/E of 23 implies that investors expect earnings growth to continue, though obviously at a lower rate than the company has been reporting. Based on analyst consensus, the stock trades at 17 times 2013 earnings and at a five-year PEG ratio of 0.8. We would worry a bit about the growth targets that the company needs to hit, even though we have been seeing it performing well in the last few quarters. An asset-based company like Seacor can also be compared to its book value, and we see that the P/B ratio is almost exactly 1.

13F filings for the third quarter of 2012 reveal that Kensico Capital, managed by Michael Lowenstein, increased its stake during that period by 24% to a total of about 720,000 shares (find more stocks Kensico was buying). Marty Whitman’s Third Avenue Management also reported a significant position in Seacor, at about 540,000 shares. Check out Whitman’s favorite stocks.

Some of Seacor’s peers may be better buys however: