"Of Mutual Interest"-William Hench, Assistant Portfolio Manager, Royce Opportunity Fund
Tuesday, June 03, 2008PAUL KANGAS: In tonight's "Of Mutual Interest" segment, we focus on a fund that concentrates on value plays in the small cap and micro cap sectors, Royce opportunity fund. While it's down for the year to date and full year, it is still ahead of its benchmark, the Russell 2000 index, for the five and 10 year periods. And since its inception, the fund has returned an average of 14.9 percent per year. William Hench is the assistant portfolio manager of Royce opportunity fund. Bill, welcome to NIGHTLY BUSINESS REPORT.
WILLIAM HENCH, ASST. PORTFOLIO MGR., ROYCE OPPORTUNITY FUND: Thank you Paul.
KANGAS: Your fund utilizes an opportunistic value approach. What does that mean?
HENCH: Right. Our funds are principle portfolio manager Bud Ano has been working with small companies for 30 years and what we're trying to do is buy stocks that are very cheap, perhaps have an issue in the short term, but over the longer term can really outperform and give us some performance that we think will help the fund do better than the Russell 2000.
KANGAS: Understood. After being closed for some time, your fund reopened to new investors earlier this year. Is that because you thought the market was a buy at that time and if so, would you say you were a little early?
HENCH: Well, this fund as well as some others at Royce and Associates opened up a little while ago after the market had taken on some pretty big losses. So, this fund as well as the others we thought presented some very good opportunity to buy some more stocks at very good prices.
KANGAS: In the past, you've had good results buying industrial stocks. Are you still doing that or there other sectors you like better in light of the slowing economy?
HENCH: We do like the industrials a lot. We think it's a global play. We think a lot of the smaller companies in the U.S. have terrific technology and terrific ability to produce goods that are needed for infrastructure, not only here but also in China, India and in the Arab world as well.
KANGAS: Of your current holdings though, are there some stocks you regard as good buys right now?
HENCH: Right. One that we like a lot is called Bottom Line Technology (EPAY).
KANGAS: We have a chart up there.
HENCH: They are a payment processor and they've got some excellent software for financial institutions as well as law firms and insurance companies. A great recurring revenue stream as well.
KANGAS: How about a second selection?
HENCH: Second one we like to Timkin (TKR), which is part of that industrial, global industrial play. It's one of our bigger holdings and it's also a name that has taken advantage of just being in a lot of -- they got 27 locations, 27 companies in different locations around the world and they have really taken advantage of strength overseas.
KANGAS: Symbol is TKR on the New York exchange.
HENCH: Right.
KANGAS: We have time for one more.
HENCH: Sure, last one we like is Penske Automotive Group (PAG) and it's a little controversial at this time. They are a large auto dealer that's got over 300 dealerships, but they've also got a little kicker in that they are the distributor in North America for the smart car, so a great managed company with --
KANGAS: PAG is the symbol on the big board. Do you own any of the stocks personally or have any other disclosures to make Bill?
HENCH: I don't own any of those, but the fund obviously owns them and I as well own the fund.
KANGAS: Thanks very much for your insights.
HENCH: Thank you, a Paul.
KANGAS: My guest, William Hench of the Royce opportunity fund.
