The FPA Queens Road Small Cap Value Fund, part of FPA Queens Road Funds, disclosed in a portfolio update that its top trades during the fourth quarter of 2022 included a new position in Rent-A-Center Inc. (RCII, Financial) and reductions to its holdings of CNO Financial Group Inc. (CNO, Financial), Synaptics Inc. (SYNA, Financial), Qorvo Inc. (QRVO, Financial) and Equity Commonwealth (EQC, Financial).
Managed by Steven Scruggs (Trades, Portfolio), the fund seeks long-term capital appreciation by investing in stocks that are trading at a discount to intrinsic value based on Benjamin Graham's principles. The fund emphasizes quantitative analysis, balance sheet strength, valuations and sector and industry trends.
As of Nov. 30, 2022, the fund’s $448 million equity portfolio contains 54 stocks with a quarterly turnover ratio of 4%. The top four sectors in terms of weight are technology, financial services, industrials and consumer cyclical, representing 25.83%, 21.54%, 18.47% and 8.71% of the equity portfolio.
Investors should be aware portfolio updates for mutual funds do not necessarily provide a complete picture of a guru’s holdings. The data is sourced from the quarterly updates on the website of the fund(s) in question. This usually consists of long equity positions in U.S. and foreign stocks. All numbers are as of the quarter’s end only; it is possible the guru may have already made changes to the positions after the quarter ended. However, even this limited data can provide valuable information.
Rent-A-Center
The fund purchased 150,000 shares of Rent-A-Center (RCII, Financial), giving the position 0.81% equity portfolio weight. Shares averaged $21.85 during the fourth quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.54 as of Tuesday.
The Plano, Texas-based rent-to-own service company has a GF Score of 80 out of 100, driven by a rank of 7 out of 10 for profitability, growth and momentum despite financial strength and GF Value ranking between 4 and 5 out of 10.
Rent-A-Center's profitability ranks 7 out of 10 on the back of returns on equity and assets underperforming more than 70% of global competitors despite gross profit margins outperforming approximately 69% of global business service companies.
CNO Financial Group
The fund sold 245,180 shares of CNO Financial Group (CNO, Financial), slicing 38.92% of the position and 1.04% of its equity portfolio.
Shares of CNO Financial Group averaged $20.23 during the fourth quarter; the stock is fairly valued based on its price-to-GF Value ratio of 0.97 as of Tuesday.
The Carmel, Indiana-based insurance company has a GF Score of 83 out of 100 based on a momentum rank of 9 out of 10, a growth rank of 8 out of 10, a profitability rank of 7 out of 10, a GF Value rank of 6 out of 10 and a financial strength rank of 3 out of 10.
CNO Financial Group’s profitability ranks 7 out of 10 on several positive investing signs, which include a three-star business predictability rank and a net profit margin that outperforms approximately 75% of global competitors.
Synaptics
The fund sold 36,000 shares of Synaptics (SYNA, Financial), trimming 29.4% of the position and 0.96% of its equity portfolio.
Shares of Synaptics averaged $99.60 during the fourth quarter; the stock is fairly valued based on its price-to-GF Value ratio of 0.96 as of Tuesday.
The San Jose, California-based semiconductor company has a GF Score of 78 out of 100, driven by a rank of 7 out of 10 for profitability, financial strength and GF Value despite growth and momentum ranking between 4 and 5 out of 10.
Synaptics’ profitability ranks 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 out of 9 and an operating margin that outperforms approximately 78% of global competitors.
Qorvo
The fund sold 37,479 shares of Qorvo (QRVO, Financial), chopping 55.05% of the position and 0.78% of its equity portfolio.
Shares of Qorvo averaged $87.50 during the fourth quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.69 as of Tuesday.
The Greensboro, North Carolina-based semiconductor company has a GF Score of 90 out of 100 based on a growth rank of 9 out of 10, a GF Value rank of 8 out of 10 and a rank of 7 out of 10 for profitability, momentum and financial strength.
Qorvo’s profitability ranks 7 out of 10 on the back of profit margins outperforming more than 70% of global competitors and returns on equity topping over 60% of global semiconductor companies.
Equity Commonwealth
The fund sold 107,801 shares of Equity Commonwealth (EQC, Financial), chopping 54.91% of the position and 0.65% of its equity portfolio.
Shares of Equity Commonwealth averaged $25.72 during the fourth quarter; the stock is fairly valued based on its price-to-GF Value ratio of 0.98 as of Tuesday.
The Chicago-based commercial real estate investment trust has a GF Score of 68 out of 100 based on a financial strength rank of 10 out of 10, a momentum rank of 4 out of 10, a growth rank of 1 out of 10 and a rank of 6 out of 10 for GF Value and profitability.
Equity Commonwealth’s financial strength ranks 10 out of 10 on several positive investing signs, which include no long-term debt, a high Altman Z-score of 12.6 and a high Piotroski F-score of 8 out of 9.
