1 Main Capital, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net return of 18.6% was delivered by the fund for the Q2 of 2021, ahead of its S&P 500 and Russell 2000 benchmark that delivered a 15.2% and 17.5% return respectively for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
In the Q2 2021 investor letter of 1 Main Capital, the fund mentioned Limbach Holdings, Inc. (NASDAQ: LMB) and discussed its stance on the firm. Limbach Holdings, Inc. is a Pittsburgh, Pennsylvania-based construction engineering company with a $75.5 million market capitalization. LMB delivered a -40.23% return since the beginning of the year, while its 12-month returns are down by 10.67%. The stock closed at $7.64 per share on September 1, 2021.
Here is what 1 Main Capital has to say about Limbach Holdings, Inc. in its Q2 2021 investor letter:
“The Fund’s position in Limbach Holdings (LMB) has fallen out of the top 5 due to appreciation of our other holdings as well as inflows into the partnership. Unfortunately, I am not comfortable adding to the position at this point since the company continues to relentlessly shoot itself in the foot when making key strategic decisions and communicating with investors.
For example, in late September 2018 (with only 10 days left in the third quarter), during an investor call organized to discuss an announced acquisition, LMB’s CEO assured investors that the company was “progressing quite nicely” in resolving its previously disclosed problems in its mid-Atlantic region. He went on to say:
“The work on correcting the past is well underway, on track. And we look forward to the third quarter earnings call reporting with more detail. But I’m very happy with the progress we’ve made down there in turning the branch around.”
Shortly thereafter, the company went on to report weak Q3 results and took full year EBITDA guidance down by more than 50%, citing continued problems in its mid-Atlantic region…” (Click here to see the full text)
Photo by Scott Blake on Unsplash
Based on our calculations, Limbach Holdings, Inc. (NASDAQ: LMB) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. LMB was in 6 hedge fund portfolios at the end of the first half of 2021, compared to 9 funds in the previous quarter. Limbach Holdings, Inc. (NASDAQ: LMB) delivered a -19.91% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
