Portfolio Change Update
Purchased Barrett Business Services (BBSI):
- Outsourced human resource services provider for small and medium sized businesses
- Historic misstep managing workers’ compensation costs led to large charges last year
- Share price tumbled as investors lost confidence
- Bulked up staff and engaged experienced external workers’ comp actuary
- Research led us to conclude that for the first time the company is now adequately reserving
- Look for existing branches to increase number of clients served
- Additional branch openings anticipated
- Company forecasted approximately 18% revenue growth in 2015 off strong 2014 growth
- Share price jumped when Barrett reported fourth quarter earnings and provided 2015 guidance
- Still, shares trading at approximately 11x 2015 estimates
Added to Vera Bradley (VRA):
- Designer, retailer, and distributor of women’s handbags
- Believe improvement in product selection and offering will meaningfully drive business
- Expanding department store distribution
- Full management team now in place after several changes
- When initially bought shares, only purchased partial weighting
- Increased confidence in turnaround, combined with lower share price, led to buying a full weighting
Trimmed Francesca’s Holdings (FRAN):
- Own over 500 women’s boutiques
- Share price rallied following announcement of increased sales guidance and new CEO
- Led to overweighting in the portfolio and decreased upside relative to our two-year price target
- Confidence continues in our catalysts
- Therefore, retained normal portfolio weighting after trim
Trimmed Innospec, Inc. (IOSP):
- Specialty chemical company
- Well run business with excellent management team
- Share price rose following dynamic acquisition
- Above average weighting was trimmed down to average holding size due to share price rise
Trimmed Merge Healthcare (MRGE):
- Medical imaging and information management software
- Increased investor confidence in business led to share price increase
- Position was trimmed as upside relative to our two-year price target diminished
Trimmed TETRA Technologies (TTI):
- Energy service company
- Decreasing confidence in our company specific catalysts
- Trimmed holding in recognition of lower confidence
Trimmed Vonage Holdings (VG):
- Provide voice over internet (VOIP) telephone services
- Share price moved up rapidly following exit of an underperforming business and an acquisition in medium size business market that could accelerate growth rate
- Trimmed shares to normal weighting