[ad_1]
Investment advisor Merrion Road Capital has released its fourth quarter 2023 investor letter. You can download a copy of the same here. Merrion Road Small Cap Fund returned 11.2% in the fourth quarter and 11.5% for the year. From an attribution perspective, +5.2% is due to risk free rate, +3.9% is due to our market exposure and +2.5% is due to alpha. Similarly, the long-only portfolio grew 9.8% in the fourth quarter for an annualized return of 38.7%. Additionally, you can check out the fund’s top five holdings to learn about the best stocks for 2023.
Merrion Road Capital featured stocks such as Duckhorn Portfolio Inc. (NYSE:NAPA) in its Q4 2023 Investor Letter. Duckhorn Portfolio, Inc. (NYSE:NAPA), headquartered in St. Helena, California, offers wines under a portfolio of brands. On January 23, 2024, Duckhorn Portfolio (NYSE: NAPA) stock closed at $8.75 per share. His 1-month return for The Duckhorn Portfolio, Inc. (NYSE: NAPA) is -9.89%, and the company’s stock has lost 48.10% of its value over the past 52 weeks. Duckhorn Portfolio, Inc. (NYSE:NAPA) has a market capitalization of $1.009 billion.
Merrion Road Capital said the following about Duckhorn Portfolio, Inc. (NYSE:NAPA) in its Q4 2023 Investor Letter:
“I took a new position Duckhorn Portfolio Co., Ltd. (NYSE:NAPA) December. NAPA is a top-three player in the U.S. fine wine category (defined by bottles over $15), with the majority of sales coming from the Duckhorn brand and the more affordable Decoy label. Like its spirits and beer peers, NAPA benefits from stable demand, established distribution and brand equity. Unlike other alcohol categories, the wine industry is highly fragmented, with many small players with romantic notions of owning their own vineyards. While this dynamic creates a fertile hunting ground for takeovers, it also creates a higher level of competition, making the business less reliable than, say, Jack Daniels.
NAPA’s stock price has fallen by up to 60% over the past few years, making it a difficult situation. This is the result of multiple contractions associated with revenue growth. NAPA is an oddball as the only “real” publicly traded wine company (see what I did there?). All other companies are a fraction of the size and unprofitable. This lack of comparability means it probably doesn’t get the attention it deserves. Additionally, investors are concerned about macro uncertainties (weak wine category, distributor inventory cuts) and the company’s idiosyncratic issues. Notably, the company’s well-regarded CEO abruptly resigned in the middle of last year. Just a few months later, NAPA announced its largest acquisition to date while operating under an interim CEO. Add in the fact that the bulk of the consideration is in the form of equity, and investors have reason to be concerned. With the stock down to less than 8x EBITDA, the valuation seems compelling enough to enter…” (Click here to read the full story)
Picturesque vineyards in North America where wine barrels are stored.
Duckhorn Portfolio, Inc. (NYSE:NAPA) isn’t on our list of 30 most popular stocks among hedge funds. According to our database, 16 hedge fund portfolios held Duckhorn Portfolio (NYSE:NAPA) at the end of the third quarter, compared to 20 in the prior quarter.
We covered Duckhorn Portfolio, Inc. (NYSE:NAPA) in another article and shared a list of the best alcohol stocks for hedge funds to own. Additionally, for investor letters from hedge funds and other leading investors, please visit our Hedge Fund Investor Letters Q4 2023 page.
Recommended articles:
Disclosure: None. This article was originally published on Insider Monkey.
[ad_2]
Source link
