BOSTON (TheStreet) -- The $69 million Hodges Small-Cap Fund (HDPSX), based far from the financial world in Dallas, has an extraordinarily eclectic portfolio. And not for nothing. Three stock holdings have more than doubled in the past 12 months, including one that has almost quadrupled.Craig Hodges, lead manager of the four-person investing team, said in an interview he bases his picks on the main fundamentals of individual companies, rather than taking a top-down approach based on industry performance. The in-house research team and portfolio managers study hundreds of companies, perform in-depth analysis and scrutinize each company's long-term investment potential.
PriceMart ( PSMT), based in California, owns and manages international merchandising businesses that license and own warehouse-type retail-membership stores that sell basic consumer goods, including perishable foods. That's a concept that has worked well for several other U.S.-based companies. PriceMart's growth wrinkle is that it is taking the membership warehouse store premise international. "They've taken their concept to Latin America which is an absolutely booming area," said Hodges. The company now operates more than 20 stores in Central America, the Caribbean and Micronesia. "It's a position that we've been adding to and it is one of my favorites right now," he said of the stock. "We've been following them for about five years. "Same-store sales are up 15% to 20% (year-over-year) and they've been doing those numbers for many quarters unbeknownst to (Wall Street), and now they're starting to get some attention," said Hodges. PriceMart's shares are up 67% over the past three months, 94% this year and 159% over the past 12 months, and it has a five-year average annual return of 42%. The company has a market value of $2.2 billion.
A.T. Cross ( ATX) is best known as a 100-year-old maker of high-end ink pens, but the company has been restructured with that part of the business now being done in China. "It's a company we've followed forever" and now it has a new product line: "sunglasses," said Hodges. "This is a tiny value company with a new growth element." It bought the Costa Del Mar brand of sunglasses in April 2003. The company makes polarized sunglasses for use in sports such as fishing, sailing and surfing. The Costa Del Mar brand is popular on college campuses, particularly in the South, and that popularity is spreading, Hodges said. A pair costs anywhere from $90 to $300. "And they're taking market share" from the likes of the popular Oakley brand, said Hodges. It also has a smaller line of sunglasses called Native, which has just been introduced and doesn't have much traction yet. A.T. Cross shares are up 5.5% this year, 89% over the past 12 months, and they have an average annual return of 10% over the past five years. The company has a market value of a mere $125 million.
Atwood Oceanics ( ATW) is a small contract deep-water oil driller with a fleet of nine rigs, made up of both jack-up and semisubmersible rigs. Much of its work is done internationally. "We feel there is going to be a big, deep-water drilling-rig shortage by 2013 and when that happens, the day rate (of rig leases) will go way up," said Hodges. "It's hard (for new companies) to get into this business so they will have tremendous pricing power." He said his firm considers its shares cheap as they are trading at a price of less than 10 times projected earnings. The stock is up 0.6% this year and 49% over the past 12 months, giving it a $2.6 billion market value. Its average annual return over the past 10 years is an amazing 18%.