On this week’s Consuelo Mack WealthTrack anexclusive interview with legendary portfolio manager Chuck Royce. The small company stock guru explains how he has beaten the market with less risk over the last 35 years and why small is still beautiful.
Here are some highlights:
- Royce was one of the pioneers of small cap investing, when he started ~35 years ago.
- There are a totally of 30,000 small cap companies world-wide according to Charles Royce.
- Sees a lot of opportunity around the world. Doesn’t do it by top down basis. Started with Europe because they had people with a lot of experience in Europe.
- He thinks of himself as a risk manager. He considers himself an absolute return investor.
- He is careful about too much concentration, and likes diversifying.
- Likes financial service companies (not banks). Likes Federated Investors.
- Likes stock exchanges as stocks.
- Average holding period is “forever”. But in reality average holding period is 4-5 years.
- Most selling occurs is where something goes very wrong with company or valuation gets completely out of whack.
- Likes companies that are paying out cash as dividends, especially as market returns are lower over coming decade.
- Thinks quality companies will do better as economy accelerates.
- Thinks stocks will return 6-8% for the next ten years.
- Likes Royce Dividend Value Fund, he thinks it will “shine”. But compares all his funds to children, so hard to pick a favorite.
- Investing in a pool of dividend stocks is best investment.
Book of the week: The Invisible Gorilla: How Our Intuitions Deceive Us (June 7, 2011) by Christopher Chabris and Daniel Simons
Prescience Partners returned 6.75% for the second quarter, underperforming the S&P 500's 8.55% return but coming out ahead of the Barclay Equity Long/ Short Index's 2.62% return. However, for the first six months of the year, Prescience is up 30.66%, doubling the S&P's 15.25% return and smashing the Barclay Equity Long/ Short Index's 9.27% return. Read More
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