Chuck Royce Portfolio, Performance and Net Worth
In this piece, we will take a look at millionaire Chuck Royce's investment portfolio, his net worth and the overall performance of the stocks. If you want to skip our introduction of the investor, his trading strategy, and details about his firm, then head on over to Chuck Royce Portfolio, Performance and Net Worth: Top 5 Stocks.
The stock market and the finance industry are made up of a variety of different players, such as banks, mutual funds, hedge fund, and exchange traded funds. Today, we'll look at a highly specialized investment firm that is known for its ability to pick out some of the best small cap stocks and invest in them through mutual funds.
This investment firm is Royce Investment Partners and it operates both open end and closed end funds. In financial terminology, open ended funds are those which can issue shares for investment anytime while closed end funds typically issue them only at the time of formation. Royce Investment Partners has three closed end funds. These are the Royce Global Value Trust, the Royce Micro-Cap Trust, and the Royce Value Trust. Out of these, the Royce Value Trust is the largest Royce closed end fund, with an average market capitalization of $2.85 billion. The other two, namely the Micro-Cap and Global Value funds have market capitalizations of $700.8 million and $1.8 billion, respectively.
However while the Royce closed end funds are quite popular, the firm's founder Mr. Chuck Royce actually started the financial firm by taking over the Pennsylvania Mutual Fund through his buyout of the fund's operator. The Pennsylvania Mutual Fund is still operated by Royce Investment, and it trades as Royce Pennsylvania Mutual Fund (NASDAQ:PENNX). The Royce Pennsylvania Mutual Fund has been managed by the same manager for more than five decades. Its lead manager is none other than Mr. Royce himself, and overall, seven managers are responsible for handling the Royce Pennsylvania Mutual Fund. The fund has an average market capitalization of $3.05 billion and net assets of $1.74 billion. Most of its investments are in American companies, with the largest portion of the funds put in industrial companies.
Shifting our focus from Royce Investment's funds to the firm's overall profile, the investment firm is headquartered in New York City, employs 38 investment professionals, and overall, the firm has $11.8 billion in assets under management (AUM). Within Royce Investment Partner's AUM, more than 95% is invested in small cap companies. Apart from open and closed end funds, Royce Investment also offers annuity portfolios, separate accounts, trusts, and co-mingled funds.
However, these are not the only financial products that Royce Investment offers. The rest come courtesy of its corporate structure. Royce Investment was acquired by the global asset management firm Legg Mason in 2001, and Mason itself was bought by another asset manager Franklin Resources, Inc. (NYSE:BEN) in 2020. So, Royce Investment is a subsidiary of Franklin Resources (also known as Franklin Templeton). Royce and Franklin Templeton offer sub-advised portfolios, separately managed accounts, and exchange traded funds (ETFs).
So, it's clear that Mr. Royce has spent quite some time on the stock market. While his net worth estimates are not easily available, we can take a look at how much his investments make him worth. Mr. Royce's filings with the Securities and Exchange Commission (SEC) show that his family investments and funds have roughly $13 million invested in the financial firm Oxford Square Capital Corp. (NASDAQ:OXSQ) and the Royce Global Value Trust, Inc. (NYSE:RGT).
Mr. Royce and his firm are quite unique in the sense that they choose to focus exclusively on small cap companies for their investment strategies. Therefore, it makes sense to learn from him about whether investing in small is any good and if it is beneficial. We have covered small cap stocks ourselves quite a bit. So, for instance, if you are interested in finding out which small cap stocks are the most profitable, then some notable picks are CONSOL Energy Inc. (NYSE:CEIX), M/I Homes, Inc. (NYSE:MHO), and Danaos Corporation (NYSE:DAC). Or, if you'd rather see which small cap stocks analysts are favoring, then a handful of notable names are Gogo Inc. (NASDAQ:GOGO), Dynavax Technologies Corporation (NASDAQ:DVAX), and Sandstorm Gold Ltd. (NYSE:SAND).
So back to Mr. Royce. In a question and answer session in July 2023, the investor shared that several market factors might have started to come into play to benefit small cap stocks. These, according to him, are:
We’ve seen other promising developments as well: durable goods orders rose for the fourth consecutive month in June, hitting a record high for nondefense capital goods (excluding aircraft or core capital goods, a proxy for business equipment investment). Homebuilding rose by 21.7% in May, a record monthly surge that also defied expectations of a slowdown. Let’s also keep in mind that over the next year or so rate hikes and inflation will likely be sunsetting. Additionally, we’ll be starting to measure the positive impacts of reshoring, the infrastructure bill, and the CHIPs Act over a similar timeframe.
This sentiment was echoed by Royce Investment's co-chief investment officer Mr. Francis Gannon who shared:
Certainly we’re hoping for a robust rebound for the U.S. economy for many reasons, not the least of which is that small caps tend to do especially well in a thriving economy. We’ve seen signs that we are getting closer. To be sure, a soft landing looks more and more likely, while the kind of deep and potentially lengthy recession many have been anticipating since late 2021 looks less and less likely. As Neil Dutta at Renaissance Macro recently put it, “The statute of limitations has now kicked in” regarding a recession in the U.S. Here’s a great example: In May, the U.S. Commerce Department reported a 0.9% seasonally adjusted increase in construction spending. Yet what was most interesting to us was how much of that spending went on new manufacturing facilities. There was a 76.3% increase from a year earlier, as well as a 1% advance in May over April. In addition, the Commerce Department showed that spending on manufacturing construction accounted for almost 0.5% of 1Q23’s GDP, which was its largest share since 1991. Its second-quarter share of GDP will probably be even higher.
So what are Chuck Royce's latest investments? Some top ones are Kennedy-Wilson Holdings, Inc. (NYSE:KW), Ziff Davis, Inc. (NASDAQ:ZD), and Air Lease Corporation (NYSE:AL), and you can see all of them below.
Chuck Royce of Royce & Associates
Our Methodology
To compile our list of Chuck Royce's top stocks, we took a look at his firm's portfolio for the first quarter of this year and selected his ten largest investments. These are ranked through their dollar value.
Chuck Royce Portfolio, Performance and Net Worth
10. First Citizens BancShares, Inc. (NASDAQ:FCNCA)
Royce & Associates' Q1 2023 Investment: $77 million
First Citizens BancShares, Inc. (NASDAQ:FCNCA) is a regional bank headquartered in Raleigh, North Carolina. Its shares are up by more than 70% year to date, and the stock is rated Buy on average.
Insider Monkey dug through 943 hedge funds for their first quarter of 2023 investments and found out that 48 had bought the bank's shares. Out of these, First Citizens BancShares, Inc. (NASDAQ:FCNCA)'s largest shareholder is John Armitage's Egerton Capital Limited, courtesy of its $586 million stake.
Just like Ziff Davis, Inc. (NASDAQ:ZD), Kennedy-Wilson Holdings, Inc. (NYSE:KW), and Air Lease Corporation (NYSE:AL), First Citizens BancShares, Inc. (NASDAQ:FCNCA) is a top Chuck Royce stock pick.
9. MKS Instruments, Inc. (NASDAQ:MKSI)
Royce & Associates' Q1 2023 Investment: $78 million
MKS Instruments, Inc. (NASDAQ:MKSI) is a backend semiconductor firm that provides products that help chip makers manufacture their products. Its share price has gained 25% so far this year, and Mr. Royce's firm has a $78 million investment in the company, making it the largest shareholder as well.
As of March 2023, 17 of the 943 hedge funds part of Insider Monkey's database had invested in MKS Instruments, Inc. (NASDAQ:MKSI). The firm's second largest hedge fund investor is Bernard Horn Polaris Capital Management with a $57.6 million investment.
8. Forward Air Corporation (NASDAQ:FWRD)
Royce & Associates' Q1 2023 Investment: $81 million
Forward Air Corporation (NASDAQ:FWRD) is a logistics company. As compared to the earlier stocks on our list, its shares have gained a mere 4% this year.
Chuck Royce's Royce & Associates owned 757,049 Forward Air Corporation (NASDAQ:FWRD) shares during 2023's March quarter for a $81 million investment. During the same time period, 16 of the 943 hedge funds polled by Insider Monkey had also held a stake in the firm, out of which the largest shareholder is Mr. Royce's firm.
7. SEI Investments Company (NASDAQ:SEIC)
Royce & Associates' Q1 2023 Investment: $83 million
SEI Investments Company (NASDAQ:SEIC) is a financial investment firm that offers services such as wealth management and investment processing. The share's are up 2% year to date, and the average share price target is $64.75.
Mr. Royce's firm is SEI Investments Company (NASDAQ:SEIC)'s largest shareholder since it owns 1.4 million shares that are worth $83 million. Alongside him, 17 of the 943 hedge funds part of Insider Monkey's database have also invested in the company as of this year's first quarter.
6. Innospec Inc. (NASDAQ:IOSP)
Royce & Associates' Q1 2023 Investment: $85 million
Innospec Inc. (NASDAQ:IOSP) is a chemicals company that sells fuel additives. Contrary to other firms on our list, the shares are down year to date and are flat over the past month.
20 of the 943 hedge funds polled by Insider Monkey for this year's first quarter had bought and owned the firm's shares. Innospec Inc. (NASDAQ:IOSP)'s largest shareholder is Royce & Associates through its $85 million investment.
Kennedy-Wilson Holdings, Inc. (NYSE:KW), Innospec Inc. (NASDAQ:IOSP), Ziff Davis, Inc. (NASDAQ:ZD), and Air Lease Corporation (NYSE:AL) are some stocks on the Chuck Royce radar.
Click to continue reading and see Chuck Royce Portfolio, Performance and Net Worth: Top 5 Stocks.
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Disclosure: None. Chuck Royce Portfolio, Performance and Net Worth is originally published on Insider Monkey.