Nomura Small Cap Value Fund on The Timken Company
Thesis
Timken manufactures engineered bearings and power-transmission products for a broad range of industrial markets. Shares benefited after management presented margin and earnings-per-share targets that exceeded expectations. The fund also sees Timken as positioned to benefit from an inflecting industrial capital-expenditure cycle. It maintained the position because the shares trade at an attractive relative valuation and the business still has margin-improvement opportunities.
“We maintained the Fund’s position in Timken as it trades at an attractive relative valuation and has margin improvement opportunities.”