WRK - Tracking Alex Roepers' Atlantic Investment Management Portfolio - Q4 2022 Update

2023-03-15 00:08:48 ET

Summary

• Atlantic Investment Management’s 13F portfolio value decreased from ~$221M to ~$185M this quarter. The number of positions decreased from 10 to 9.
• Alex Roepers dropped Lear Corp and decreased Ralph Lauren, WestRock, Timken, Univar, Avnet, and Huntsman this quarter.
• The top three positions are Flowserve, Ralph Lauren, and Eastman Chemical and they add up to ~43% of the portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to Alex Roepers' 13F portfolio on a quarterly basis. It is based on Roepers' regulatory 13F Form filed on 2/14/2023. Please visit our Tracking Alex Roepers' Atlantic Investment Management Portfolio article for an idea on his investment philosophy and our last update for the fund's moves during Q3 2022.

This quarter, Roepers' 13F portfolio value decreased ~17% from ~$221M to ~$185M. The number of holdings decreased from 10 to 9. The top three holdings are at ~43% while the top five are at two-thirds of the 13F assets: Flowserve, Ralph Lauren, Eastman Chemical , Westrock Company, and Timken.

Atlantic Investment Management's annualized returns since the flagship fund's inception in 1992 through 2017 was impressive at ~16%. Last five years, the fund has underperformed the S&P 500 Index. To know more about activist investing, check out Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations .

Stake Disposals:

Lear Corp. ( LEA ): LEA is a ~8% of the portfolio position established in Q4 2020 at prices between ~$113 and ~$165 and the stock currently trades at ~$140. There was a ~12% trimming in Q4 2021 at prices between ~$146 and ~$188. That was followed with a ~15% selling last quarter at prices between ~$120 and ~$156. The disposal this quarter was at prices between ~$120 and ~$150.

Stake Increases:

Flowserve Corp. ( FLS ): FLS is now the largest position at 14.37% of the portfolio. It was established last quarter at prices between ~$24 and ~$35 and the stock currently trades at $32.63. There was a ~7% stake increase this quarter at prices between ~$24 and ~$33.

Eastman Chemical ( EMN ): EMN was a large stake established in Q4 2015 at prices between $65 and $74. The position has wavered. Recent activity follows: H2 2019 and Q1 2020 saw the position sold down at prices between $38 and $83.90. It was re-built in Q4 2021 at prices between ~$101 and ~$121. There was a ~25% selling next quarter at prices between ~$105 and ~$128. The stock is now at $82.88, and the stake is at ~14% of the portfolio. The last three quarters have seen only minor adjustments.

Stake Decreases:

Ralph Lauren ( RL ): RL is a large (top three) 14.24% of the portfolio stake established during H1 2022 at prices between ~$87 and ~$134 and the stock currently trades at ~$112. The last two quarters have seen a one-third selling at prices between ~$85 and ~$116.

WestRock Co. ( WRK ): WRK is currently at 12.78% of the portfolio. It was built in Q4 2019 at prices between $33.50 and $43.25. Q1 2020 saw a ~17% selling while in the next quarter there was a two-thirds increase at prices between $24 and $34. Q4 2020 saw a ~10% trimming while next quarter there was a ~20% stake increase at prices between ~$41 and ~$54. The two quarters through Q3 2021 had seen a ~22% selling at prices between ~$48 and ~$62. That was followed with a ~30% reduction this quarter at prices between ~$31 and ~$38. The stock is currently at $28.34.

Timken Company ( TKR ): TKR is a ~12% of the portfolio position established in Q4 2021 at prices between ~$64 and ~$77. H1 2022 saw a ~57% stake increase at prices between ~$52 and ~$75 while in the last two quarters there was a ~50% stake reduction at prices between ~$53 and ~$69. The stock currently trades at $82.74.

Univar Solutions ( UNVR ): UNVR is currently at ~11% of the portfolio. It was established in Q2 2020 at prices between $9.60 and $18.15. The two quarters through Q1 2021 had seen a one-third stake increase at prices between ~$16.50 and ~$22. Q1 2022 saw a ~45% selling at prices between ~$26.50 and ~$34. The last two quarters had seen a ~22% stake increase at prices between ~$21.70 and ~$32.35. This quarter saw a ~50% reduction at prices between ~$23 and ~$33.50. The stock currently trades at $34.91.

Avnet, Inc. ( AVT ): The ~11% AVT stake was purchased in Q4 2020 at prices between ~$24.50 and ~$35.25. There was a ~30% stake increase in the next quarter at prices between ~$35 and ~$41.50. Q4 2021 saw a ~11% stake increase while next quarter there was a ~17% trimming. The zig-zag trading pattern continued over the last three quarters: a ~15% increase in Q2 2022 followed with a ~43% reduction in the last two quarters. The stock is now at ~$43.

Huntsman Corp. ( HUN ): HUN is a 4.46% of the portfolio stake. It was established in Q1 2021 at prices between ~$25 and ~$29.50. The stake was more than doubled the next quarter at prices between ~$25 and ~$31.60. The last four quarters saw a ~83% reduction at prices between ~$24 and ~$41. The stock currently trades at $27.79.

Note: Huntsman is a frequently traded pick in the portfolio. Details of the latest roundtrip follow: It was a ~5% of the portfolio stake established in Q2 2017 at prices between $23 and $27. The five quarters through Q2 2019 had seen a combined ~50% selling at prices between $17.35 and $35.30. That was followed by another two-thirds selling the next quarter at prices between $18.25 and $23.50. Q4 2019 saw the position almost eliminated at prices between $21.50 and $25. The remainder stake was disposed in H1 2020.

Kept Steady:

O-I Glass ( OI ) previously Owens Illinois : OI is a very long-term stake. In 2008, the position was small and was built to 11.2M shares by 2012 through consistent buying. Recent activity follows: Q4 2020 saw a ~45% selling at prices between ~$9.40 and ~$13. The two quarters through Q2 2021 had seen another ~75% selling at prices between $11.50 and $19.30. The stock currently trades at $21.41, and the stake is now at 5.87% of the portfolio.

The spreadsheet below highlights changes to Roepers' 13F stock holdings in Q4 2022:

For further details see: