Value Investing and Finding Opportunities: Charlie Dreifus in Citywire—Royce
article 04-25-2022

Value Investing and Finding Opportunities: Charlie Dreifus in Citywire

Portfolio Manager Charlie Dreifus details a company he currently holds, his distinctive approach to value investing, and his highly diligent process in Citywire.


Portfolio Manager Charlie Dreifus was featured in a Citywire article “Why Value Veteran Charlie Dreifus Balks at Banks and Favors the Rust Belt” by John Coumarianos discussing a holding that exemplifies his approach, how the current market resembles past ones, his Pittsburgh-to-Minneapolis hunting ground, and more.

Read the article (subscription required).

Charlie details how the current market is most comparable to the 1970’s, which is partly due to how that period’s “Nifty Fifty” market is similar to the FAMNAG (Facebook, Amazon, Microsoft, Netflix, Apple, and Google) stocks of today. He also explained why Movado is a company he currently favors, describing it as having an attractive absolute valuation, high returns on invested capital, strong financials, and accounting methods that meet his stringent requirements.

“I want my investors to understand portfolio needs to be evaluated over a full market cycle—one that has both up and down phases,” Charlie said. “We have never resembled or tracked the performance pattern of the small-cap index. We have both a high tracking error and high active share to show how we do not own the index. Given our concentrations, this sometimes helps and sometimes hurts.”

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Learn more about Charlie Dreifus.

Important Disclosure Information

Average Annual Total Returns as of 3/31/22 (%) 

Special Equity -5.71 2.01 9.08 6.39 7.91 7.55 8.43 8.76 05/01/98
Russell 2000 Value -2.40 3.32 12.73 8.57 10.54 6.91 8.55 10.01 N/A
Russell 2000 -7.53 -5.79 11.74 9.74 11.04 7.99 8.72 9.12 N/A

Annual Operating Expenses: 1.23

1 Not annualized.

All performance information reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 days of purchase may be subject to a 1% redemption fee, payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at Operating expenses reflect the Fund's total annual operating expenses for the Investment Class as of the Fund's most current prospectus and include management fees and other expenses.

Mr. Dreifus’s thoughts and opinions concerning the stock market are solely their own and, of course, there can be no assurance with regard to future market movements. No assurance can be given that the past performance trends as outlined above will continue in the future.

The performance data and trends outlined in this presentation are presented for illustrative purposes only. Past performance is no guarantee of future results. Historical market trends are not necessarily indicative of future market movements.

Percentage of Fund Holdings As of 3/31/2022 (%)

Special Equity

Movado Group


Company examples are for illustrative purposes only. This does not constitute a recommendation to buy or sell any stock. There can be no assurance that the securities mentioned in this piece will be included in any Fund’s portfolio in the future.

Sector weightings are determined using the Global Industry Classification Standard ("GICS"). GICS was developed by, and is the exclusive property of, Standard & Poor's Financial Services LLC ("S&P") and MSCI Inc. ("MSCI"). GICS is the trademark of S&P and MSCI. "Global Industry Classification Standard (GICS)" and "GICS Direct" are service marks of S&P and MSCI.

The Price-to-Book, or P/B, Ratio is calculated by dividing a company's share price by its book value per share. Return on Invested Capital is calculated by dividing a company’s past 12 months of operating income (earnings before interest and taxes) by its average invested capital (total equity, less cash and cash equivalents, plus total debt, minority interest, and preferred stock).

Tracking Error measures the volatility of a portfolio’s excess returns relative to a benchmark in which volatility is shown by the standard deviation of the excess returns. A high tracking error percentage means there has been a greater divergence in monthly performance between the portfolio and the benchmark. Royce Special Equity Fund’s Five-Year Tracking Error as a 3/31/22 was 9.6%.

Active Share: The sum of the absolute values of the different weightings of each holding in the Portfolio versus each holding in the benchmark, divided by two. Royce Special Equity Fund’s Active Share as of 3/31/22 was 98%.

Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and / or Russell ratings or underlying data and no party may rely on any Russell Indexes and / or Russell ratings and / or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. The Russell 2000 is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 index. The Russell 2000 Value and Growth indexes consist of the respective value and growth stocks within the Russell 2000 as determined by Russell Investments. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. The Fund invests primarily in small-cap stocks which may involve considerably more risk than investing in larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.) As of 03/31/22, the Fund invested a significant portion of its assets in a limited number of stocks, which may involve considerably more risk than more broadly diversified portfolio because a decline in the value of any one of these stocks would cause the Fund's overall value to decline to a greater degree. (Please see "Primary Risks for Fund Investors" in the prospectus.)



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