Robotti & Company is a New York deep-value boutique founded by Bob Robotti in 1983, specializing in left-for-dead cyclical industries — energy services, building products, shipping — with multi-year holding periods and occasional activist letters. It manages about $650m; Bob is regarded as one of the most steadfast Graham-tradition cyclical value hunters.
This is a letter from investment firm Robotti to clients during the March 2020 COVID-19 panic. The message: don't panic-sell. Most of their investments aren't in traditional oil and gas, but in financially solid companies like Westlake Chemical (a chemical maker) and Lincoln Electric (a welding equipment firm). These firms have strong balance sheets, plenty of cash, and experienced management—some are even buying back stock or eyeing acquisitions at low prices. For regular investors, the takeaway is that during market fear, good companies can become undervalued. Selling in a panic might mean missing out on long-term gains.
Robotti & Company, in a report dated March 24, 2020, discussed the impact of the COVID-19 pandemic on investment portfolios and corresponding strategies. The core view is that investors should pause, avoid panic, and think calmly. The report emphasizes that over 75% of investments are not in the tra
This chapter is a letter to investors published by Robotti & Company on March 24, 2020, aimed at updating management feedback and core holdings analysis of portfolio companies amid the severe market volatility caused by the COVID-19 pandemic. The report emphasizes that despite market panic, investors should pause, avoid panic, and think calmly, reiterating that over 75% of investments are not in traditional oil and gas sectors.
The author's core investment argument is: the current market panic is temporary, and investors should not panic-sell but instead maintain their investments. The report argues that the companies in the portfolio possess core traits such as financial stability, differentiated business models, and experienced management, enabling them to survive the crisis and seize opportunities. The counterintuitive judgment is that, despite an unprecedentedly severe economic environment, these companies were already valued at extremely low levels before the pandemic, and their current prices are far below their value under normal economic conditions, making this a time for contrarian positioning.
Core Holdings Comparison Data:
| Company | Key Financial Data | Management Actions | Valuation Metrics |
|---|---|---|---|
| Westlake Chemical (NYSE:WLK) | Strong balance sheet, ample free cash flow; repaid over $1.5 billion in debt after the 2016 acquisition of Axiall, reducing leverage, extending maturities, and lowering interest expenses | Chairman Chao family purchased approximately $6 million in shares on the open market | Approximately 1x tangible book value; approximately 3.5x normalized earnings |
| Lincoln Electric (NASDAQ:LECO) | Holds over $200 million in cash; earliest debt maturity is 2025 ($100 million); five factories in China have resumed operations, with an expected loss of only $5 million | Continues to seek bolt-on acquisition opportunities; repurchases shares during stock price weakness | No specific multiple given, but cash flow abundance is emphasized |