07-01-02 Another Brick in the Wall
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8/7/2019 07-01-02 Another Brick in the Wall http://slidepdf.com/reader/full/07-01-02-another-brick-in-the-wall 1/1 Get Quote: Find symbol Symbol(s) Search: Keyword(s) Advanced search THE STOCKPICKERS Another brick in the wall Focus on corporate restructurings puts strong foundation under Keeley Fund By Carolyn Pritchard, MarketWatch Last Update: 6:03 AM ET Jan 2, 2007 SAN FRANCISCO (MarketWatch) -- Change is unavoidable with investing, but to mutual-fund manager John Keeley Jr., it can provide profitable opportunities. So many opportunities, in fact, that all the small-cap companies in his Keeley Small Cap Value Fund ) are in he midst of some degree of corporate restructuring. We buy stocks that are going through significant changes," he said. These changes come in one of five forms: spin-offs; savings and loan and insurance conversions; companies trading below their book value; businesses emerging from bankruptcy, and, finally, what Keeley calls "wayward utilities" -- companies that made ill-timed or mismanaged acquisitions. There are many such utilities in the wake of the industry's deregulation several years ago, he says. In corporate restructuring, you just don't know when it's going to work out," Keeley noted. "You need a reasonable amount of patience." Patience has helped the fund to a strong 19.2% gain in the 12 months through Dec. 29, versus a 14.3% average eturn for its small-cap core peers, according to fund tracker Lipper Inc. Keeley's three-year 22.3% annualized return also tops its peers' 12.9% gain. Among his recommendations is L.B. Foster Co. ) , which makes products used in he rail and construction industries. This is a capital expenditures play because railroads have been underspending for several years, and now they're spending a lot more for capital equipment," Keeley said. But the "real secret" to L.B. Foster, he said, is the company's 13.4% stake in the Dakota, Minnesota & Eastern Railroad. DM&E has applied for $2.5 billion in f ederal funding for our projects, including a 900-mile extension of the railroad's line into Wyoming's Powder River Basin coal fields and an upgrade of existing lines to handle coal train traffic. If they get the permits to do this it's going to be a major event for the company," Keeley said. On Friday, shares of L.B. Foster closed at $25.91, up $2.27. Another mining play and favorite of Keeley's is Bucyrus International Inc. ) , a 24-year-old South Milwaukee, Wis.-based company that makes high-powered shovels and drills. n December, Bucyrus agreed to pay $731 million for DBT GmbH, a subsidiary of Germany's RAG Coal International. DBT, with annual revenue of roughly $1 billion, makes roof support systems, armored face conveyers and other coal mining equipment. The deal is expected to close at the end of the first quarter. Shares of Bucyrus International closed Friday at $51.76, up 42 cents. Keeley also likes Idearc Inc. ) , the recently spun out telephone directory business of Verizon Communications ) . This is basically a cash-flow story; these companies generate a lot of cash and don't need to put much of it back into the business," he said. As a division of Verizon, the company posted revenue of $3.45 billion in 2005, down 2.7% from the full-year 2004 period. The decrease was attributed to lower domestic print ad revenue. The domestic online directory and search service arm of the division, SuperPages.com, saw its revenue grow 18.4% over 2004, with Internet yellow pages searches up 17.1%. Shares of Idearc lost 10 cents on Friday to $28.65. (KSCVX (FSTR (BUCY (IAR (VZ Carolyn Pritchard is a reporter for MarketWatch in San Francisco. Copyright © 2007 MarketWatch, Inc. All rights reserved. By using this site, you agree to the Terms of Service and Privacy Policy (updated 4/3/03). ntraday data provided by Comstock, a division of Interactive Data Corp. and subject to terms of use. Historical and current end-of-day data provided by FT Interactive Data. More information on NASDAQ traded symbols and their current financial status. ntraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. Dow Jones IndexesSM from Dow Jones & Company, Inc. SEHK intraday data is provided by Comstock and is at least 60-minutes delayed. All quotes are in local exchange time. NEWS & COMMENTARY MARKETS MUTUAL FUNDS & ETFS PERSONAL FINANCE TOOLS & RESEARCH MY MARKETWATCH TODAY'S VIDEO
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THE STOCKPICKERS
Another brick in the wallFocus on corporate restructurings puts strong foundation under Keeley Fund
By Carolyn Pritchard , MarketWatch Last Update: 6:03 AM ET Jan 2, 2007
SAN FRANCISCO (MarketWatch) -- Change is unavoidable with investing, but to mutual-fund manager JohnKeeley Jr., it can provide profitable opportunities.
So many opportunities, in fact, that all the small-cap companies in his Keeley Small Cap Value Fund ) are inhe midst of some degree of corporate restructuring.
We buy stocks that are going through significant changes," he said.
These changes come in one of five forms: spin-offs; savings and loan and insurance conversions; companies tradingbelow their book value; businesses emerging from bankruptcy, and, finally, what Keeley calls "wayward utilities" --companies that made ill-timed or mismanaged acquisitions. There are many such utilities in the wake of the industry'sderegulation several years ago, he says.
In corporate restructuring, you just don't know when it's going to work out," Keeley noted. "You need a reasonableamount of patience."
Patience has helped the fund to a strong 19.2% gain in the 12 months through Dec. 29, versus a 14.3% average
eturn for its small-cap core peers, according to fund tracker Lipper Inc. Keeley's three-year 22.3% annualized returnalso tops its peers' 12.9% gain.
Among his recommendations is L.B. Foster Co. ) , which makes products used inhe rail and construction industries.
This is a capital expenditures play because railroads have been underspending forseveral years, and now they're spending a lot more for capital equipment," Keeley said.
But the "real secret" to L.B. Foster, he said, is the company's 13.4% stake in the Dakota,Minnesota & Eastern Railroad. DM&E has applied for $2.5 billion in federal funding forour projects, including a 900-mile extension of the railroad's line into Wyoming's Powder
River Basin coal fields and an upgrade of existing lines to handle coal train traffic.
If they get the permits to do this it's going to be a major event for the company," Keeley said.
On Friday, shares of L.B. Foster closed at $25.91, up $2.27.
Another mining play and favorite of Keeley's is Bucyrus International Inc. ) , a24-year-old South Milwaukee, Wis.-based company that makes high-powered shovels
and drills.
n December, Bucyrus agreed to pay $731 million for DBT GmbH, a subsidiary ofGermany's RAG Coal International. DBT, with annual revenue of roughly $1 billion,makes roof support systems, armored face conveyers and other coal mining equipment.The deal is expected to close at the end of the first quarter.
Shares of Bucyrus International closed Friday at $51.76, up 42 cents.
Keeley also likes Idearc Inc. ) , the recently spun out telephone directory businessof Verizon Communications ) .
This is basically a cash-flow story; these companies generate a lot of cash and don'tneed to put much of it back into the business," he said. As a division of Verizon, thecompany posted revenue of $3.45 billion in 2005, down 2.7% from the full-year 2004period. The decrease was attributed to lower domestic print ad revenue.
The domestic online directory and search service arm of the division, SuperPages.com,saw its revenue grow 18.4% over 2004, with Internet yellow pages searches up 17.1%.
Shares of Idearc lost 10 cents on Friday to $28.65.
(KSCVX
(FSTR
(BUCY
(IAR(VZ
Carolyn Pritchard is a reporter for MarketWatch in San Francisco.
Copyright © 2007 MarketWatch, Inc. All rights reserved.By using this site, you agree to the Terms of Service and Privacy Policy (updated 4/3/03).
ntraday data provided by Comstock, a division of Interactive Data Corp. and subject to terms of use.Historical and current end-of-day data provided by FT Interactive Data.More information on NASDAQ traded symbols and their current financial status.ntraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges.Dow Jones IndexesSM from Dow Jones & Company, Inc.SEHK intraday data is provided by Comstock and is at least 60-minutes delayed.All quotes are in local exchange time.
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