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Arnold Van Den Berg Exits Synalloy

- By Kyle Ferguson

Guru Arnold Van Den Berg (Trades, Portfolio), who founded Van Den Berg Management in 1974 and later changed its name to Century Management, sold out his remaining -342,749 shares of Synalloy Corp (SYNL) for an average price of $7.79 per share during the third quarter. Van Den Berg purchased his initial stake in Synalloy Corp during the third quarter of 2013 at an average price of $15.98 per share. Since his initial purchase three years ago, the company's market price has plummeted an estimated 40%.

Synalloy Corp has a market cap of $86.59 million, an enterprise value of $112.9 million, a price-book (P/B) ratio of 0.92, a current ratio of 3.34 and a quick ratio of 1.05.

Synalloy Corp is headquartered in Spartanburg, South Carolina. The company's business is divided into two reportable operating segments, the Metals segment and the Specialty Chemicals segment. The Metals segment operates as three reporting units, including BRISMET, Palmer of Texas and Specialty Pipe & Tube.The Metals segment's markets include the chemical, petrochemical, pulp and paper, mining, power generation (including nuclear), water and wastewater treatment, liquid natural gas ("LNG"), brewery, food processing, petroleum, pharmaceutical and other industries.

The Specialty Chemicals segment is made up of Manufacturers Chemicals LLC and CRI Tolling LLC. Synalloy Chemicals produces specialty chemicals for the carpet, chemical, paper, metals, mining, agricultural, fiber, paint, textile, automotive, petroleum, cosmetics, mattress, furniture, janitorial and other industries.

According to GuruFocus, Synalloy has a 5 of 10 financial strength rating with a cash to debt ratio of 0.08 and an equity to asset ratio of 0.63. Its Piotroski F-Score of 4 indicates the company's financial situation is typical for a stable company. The company also has a 4 of 10 profitability & growth rating with an operating margin of -15.18%, a net margin of -14.26%, a ROE of -20.08%, a ROA of -12.86%, aROC (Joel Greenblatt (Trades, Portfolio)) of -16.62% and three-year revenue growth of -13.30%.

It's possible that Van Den Berg sold out of Synalloy because the company's market price had significantly decreased during the three years in which Van Den Berg owned a stake. The company's revenue per share had also been in long-term decline at an estimated -27.70% over the previous three years. The company's days inventory has increased from 156.19 in June 2015 to 177.12 in June 2016, indicating that the company's sales have slowed down by an estimated 12% over the previous calendar year.

Since Van Den Berg sold out of Synalloy, the company's market price has gained an estimated 28%.

Below is a Peter Lynch chart that shows Synalloy is currently trading below its intrinsic value.

Disclosure: Author does not own any shares of this company.

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This article first appeared on GuruFocus.