A Wall Street Transcript Interview with Dilip P. Badlani, CFA, a Portfolio Manager for Royce & Associates, LLC, Investment Adviser to The Royce Funds: Finding Attractive Values in International Microcap Companies

Wall Street Transcript

67 WALL STREET, New York - April 24, 2014 - The Wall Street Transcript has just published its Investing Strategies Report. This special feature contains expert industry commentary through in-depth interviews with highly experienced, professional Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Small Cap Investing - Value Investment - Investment Risk Management Strategies - Long-Term Investing - High-Quality Companies - Investing in Agriculture - International Microcap Investing - Low-Volatility Investing

Companies include: Magellan Aerospace (MAL.TO), Zuiko Corporation (TYO:6279), TFS Holdings (TFC.AX), Brasil Brokers (BBRK3.SA) and many others.

In the following excerpt from the Investing Strategies Report, an experienced international microcap portfolio manager discusses his methodology and current top picks for investors:

TWST: Could we begin with an overview of the Royce International Micro-Cap Fund's investment philosophy and strategy?

Mr. Badlani: Royce International Micro-Cap Fund was launched in January of 2011. I began to co-manage the Fund with Jim Harvey in October of last year. The strategy here is quite simple. We are focusing on non-U.S. companies with market caps up to $750 million. In typical Royce fashion, we focus on high-quality companies and typically hold around 100 to 120 positions headquartered in about 25 to 30 countries. Like most Royce Funds, Royce International Micro-Cap Fund has a long-term focus. We're trying to find companies with strong balance sheets and high returns on invested capital that are also ideally market leaders in their industries.

TWST: What are some of the Fund's top holdings that best exemplify this strategy?

Mr. Badlani: One position that we've built into the Fund's top holdings at the end of March is Magellan Aerospace (MAL.TO), an aerospace supplier located in Toronto. The company has a high degree of insider ownership, which we like because it aligns the management team alongside shareholders, like ourselves, when management is thinking about longer-term investment horizons instead of quarterly investments. The company has a long tailwind of order backlog that it's working on, given the current aerospace replacement cycle.

The company is not solely focused on one or two programs, but is diversified across several different programs. It doesn't have any inherent risk with, say, 787 or 737 jets, but across Boeing (BA) and Airbus (AIR.PA). At the same time, the firm is also in the defense business with Lockheed Martin (LMT) and other big defense companies globally...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

View Comments (0)