Arnold Van Den Berg
, founder of Austin-based Century Management and veteran value
investor, went into the second quarter ignoring the abounding
negative headlines on the belief that they didn't tell the whole
story, ignored the offsetting good news or were meaningless for
the long term. "A lot of these problems that we're reading about
really don't impact the value of the company over the long run,"
Van Den Berg said in a May 31, 2012 interview, "but they might
impact it over the short run, so everybody sells because of the
short term, but they've sold something pretty cheap because over
the long term it hasn't changed that much."
He also believed that going to cash could cause him to miss
opportunities to make money when offsetting good news arrived,
while inflation loomed over the long-term.
By the end of the second quarter, he had reduced a fractional
amount of the majority of his holdings, but also added to several
and bought three new ones: Astec Industries (
), Layne Christensen Company (
) and Comstock Mining (
Astec Industries (
Van Den Berg bought 647,375 shares of his new holding Astec
Industries in the second quarter of 2012. He had sold out of a
smaller position previously in the third quarter of 2011 at an
average price of $34 per share.
Astec Industries manufactures equipment for building and
restoring the world's infrastructure, including euipment for
asphalt road building, aggregate processing, pipeline and utility
trenching, oil gas and water well dripping and wood processing.
It focuses on applying high-tech solutions to what have been
In the last ten years, Astec has increased its revenue at an
annual rate of 6.5%, EBITDA at 36.8% and book value at 11.3%. As
of March 31, the company had $42 million in cash on its balance
sheet and $33.9 million in long-term liabilities, with no debt.
In the first quarter, the company's sales increased 16%, while
earnings increased 20% from the year-ago quarter. International
sales were particularly robust, increasing 27%, while domestic
sales increased 9% from the year-ago quarter.
The company is seeking to grow through accretive bolt-on
acquisitions and through developing new products.
Layne Christensen Company (
Van Den Berg bought 69,880 shares if Layne Christenson Company in
the first quarter.
Layne Christenson is a drilling company in four primary markets:
water-related products and services, mineral exploration
drilling, geotechnical construction and oil and gas production
and services. Its primary customers are municipalities;
industrial, mining, oil and gas companies; and consulting and
In the last ten years, Layne Christensen has grown revenue at an
annual rate of 10.6%, EBITDA at 10.3% and book value at 16.2%.
The company has $218.2 million in cash on its balance sheet and
$124.96 million in long-term liabilities and debt.
In its first quarter 2013, the company's revenue increased 3.4%
over the year-ago quarter and net income fell to $3.7 million
compared to $13.1 million in the year-ago quarter, which included
a gain of $5.1 million on the sale of a facility in Fontana,
The company said that its underperformance stemmed from
continuing economic difficulties which affected its water
infrastructure divisions and Lane Energy. Low natural gas prices
had a particularly negative impact on Layne Energy's results.
Layne Christensen's heavy civil division had its worst quarter as
the company struggled with old pricing and execution issues, and
the company expects losses for the rest of the year. Its Inliner
division exceeded expectations but did not reach last year's
quarter, Geoconstruction is expecting a record year, and Water
Resources is having a slow but profitable year. Mineral
Exploration also had a record quarter, and the company overall
expects better financial performance for the remainder of fiscal
In June, the company bought the remaining 50% it did not own of
Costa Fortuna, a Brazilian construction company.
Comstock Mining (
Van Den Berg bought 178,935 shares of his third-largest new buy,
Comstock Mining (
), in the first quarter.
Comstock is a precious metals mining company with operations in
Nevada in the Comstock Lode District. It changed its name to
Comstock Mining from GoldSpring in July, 2010.
Comstock has only one year of reported financial results under
its new name. In that year, 2011, it produced revenue of $0.47
million and reported a net loss of $11.6 million.
In the first quarter of 2012, the company commenced production in
its Lucerne mine and progressed in work on several others. Its
net loss increased to $7.3 million compared to $2.4 million in
the year-ago quarter, primarily due to an increase in operating
expenses. Total debt at the end of the quarter was $3.9 million,
compared to $1.4 million in the previous quarter, and cash was
$16 million, compared to $9.2 million in the previous quarter.
The company is still nearing production and says it is "rapidly
becoming Nevada's newest gold and silver mining company."
A senior portfolio manager from Century Management expounds on
the firm's views on gold here
Van Den Berg's top holdings are: Microsoft (
), MDC Holdings (
), Toll Brothers (
), Jacobs Engineering Group (
) and Cisco Systems (
See the rest of his portfolio here
. Also check out the
, Top Growth Companies and High Yield stocks of Arnold Van Den
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