article , video 06-29-2016

Bill Hench Sees a Deep Value Opportunity in Industrial Manufacturing

Portfolio Manager Bill Hench discusses the opportunities he sees in industrial manufacturing companies and how they have been impacted by recent events. 

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Timely Investment Idea: Industrial Manufacturing

I think something timely for a fund like ours, the industrial manufacturing companies in the U.S., they have really been beaten up, with cause. You have had very, very difficult times with the currency.

The dollar has made it difficult for them to compete, especially against European companies. The energy pullback has been very, very hard on them. You know, order books have been cut in half and in some cases even worse.

And the general lack of excitement in the economy has left these things for dead. They're not – we're in a great position now. They have readjusted to the world or adjusted to the world that is now at $40 for oil. They have adjusted to the dollar and unless you think the dollar is going to go up another 25%, you're probably going to get a little of relief on the currency.

So these are good companies. Their end markets are pretty good. I think that things in Asia and Europe have stopped negatively affecting them and this is a group that is very, very typical of what we do. They have got tremendous valuations and I think good prospects two or three years down the road.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the person speaking as of April 12, 2016 and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements.

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. Smaller-cap stocks may involve considerably more risk than larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.)

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