Royce Premier Fund reveals biggest contributing and detracting holdings of 2024

Managers of the Royce Premier Fund have revealed which holdings contributed and detracted the most from the portfolio’s performance in 2024. The Royce Premier Fund, like all funds offered by the firm founded by Wall Street legend Chuck Royce, invests in small-cap stocks, but it specializes in “premier” assets, capable of generating excess cash flow and reinvesting it to grow.

Quotes on the financial company SEI Investments have grown by nearly a third since the start of 2024 to $82.80 per share. According to MarketWatch, the average target price among coverage analysts suggests 9% upside. The company's market capitalization currently stands at $10.6 billion.

SEI works with institutional investors, financial advisors, and ultra-high-net-worth families. Its partners include 10 of the 20 largest U.S. banks, as Royce Premier Fund managers point out. The company offers platforms for investment management and cybersecurity solutions.

For 2024, SEI reported 11% year-over-year growth in revenue to $2.1 billion and a 27% increase in diluted earnings per share (EPS) to $4.40. At the year-end, SEI had $1.6 billion in assets under management, advisement, and administration.

In the fourth quarter, Royce funds reduced the size of their position in SEI by about 7.4%, selling shares worth $8.2 million at an average price of $75.80 apiece.

Shares of Kadant, which calls itself a global leader in technologies and engineered systems that drive sustainable industrial processing, have soared 54% since the beginning of 2024 to $398.40 per share. They are now just 2.7% below the most optimistic Wall Street estimates and 11.0% above the average target price. Analyst ratings are evenly split: two “buys” and two “holds.”

Kadant offers recycling solutions. For instance, its wood and fiber processing product lines can be used to produce alternative fuels, and it can turn linerboard and tissue into new packaging. Royce Premier Fund managers believe this is particularly relevant given the global boom in e-commerce, which uses three to six times more containerboard per shipment than retail stores.

For 2024, Kadant reported a 10% year-over-year revenue increase to a record $1.05 billion, a 4% decline in EPS to $9.48, and a 2% rise in adjusted EPS to a record $10.28. “We like Kadant’s tech-driven… after-market orientation approach that also has the company benefiting from a long history of loyal customer relations,” Royce Premier Fund managers stated.

In the last quarter of 2024, Royce funds took some profit on Kadant, trimming their holdings by 14.8% through share sales of about $12.2 million.

With a market capitalization of almost $2.5 billion, Quaker Houghton manufactures industrial process fluids, including heat treatment solutions, cleaners, casting lubricants, and metal rolling oils.

In 2024, the stock lost almost a third of its value, and finished the year at $146.70 per share. After a period of rapid growth in 2023, the company encountered difficulties amid a slowdown in global industrial growth and has yet to recover, Royce Premier Fund managers note. However, they still consider Quaker an “attractive business with recurring revenues and strong customer loyalty.” In November, Joseph Berquist was named the company’s new CEO. Royce Premier Fund believes he will focus on accelerating sales growth for new products and geographic expansion.

Most analysts covering Quaker remain upbeat on its outlook, with four “buy” ratings and two “holds,” according to MarketWatch. Their average target price of $182.50 implies upside of over 27%.

At the end of last year, Royce funds increased their stake in Quaker by nearly a third.

Enovis, with a market capitalization of $2.5 billion, manufactures orthopedic devices and surgical implants.

Since the start of 2024, the stock is off more than 20% at $44.30 per share. It has been under pressure since Enovis completed its largest acquisition in early 2024, when it acquired an orthopedic reconstruction company, Royce Premier Fund managers point out. “The strategic fit and valuation of the deal make sense to us, but near-term integration is always a risky process,” they add, noting that the fund periodically increased its position in Enovis throughout 2024. “Investors appear to be waiting for evidence that product line rationalization, salesforce integration, cost synergies, and, ultimately, revenue growth from cross selling the combined company’s product are materializing consistent with management’s expectations.” In the fourth quarter, Royce funds bought an additional $2.9 million worth of Enovis shares.

Most analysts also remain upbeat on the name. There are 10 “buy” recommendations and only one “hold,” according to MarketWatch. Their average target price of $66 per share is 50% higher than the current market price.