You can find the first part of this article here: 10 Undervalued Stocks Hedge Funds Are Talking About. Here are the top 5 stocks:
5. Inotiv Inc. (NOTV)
Summers Value Partners, in its Q4 2021 investor letter, mentioned Inotiv, Inc. (NASDAQ: NOTV) and discussed its stance on the firm. Inotiv, Inc. is a West Lafayette, Indiana-based biopharmaceutical analytical, reproductive toxicology, medical device testing provider with an $831.6 billion market capitalization. NOTV delivered a -22.34% return since the beginning of the year, while its 12-month returns are up by 162.83%. The stock closed at $32.67 per share on February 3, 2022.
Here is what Summers Value Partners has to say about Inotiv, Inc. in its Q4 2021 investor letter:
“Inotiv is a contract research organization (CRO) providing pre-clinical research services to the pharmaceutical and biotechnology industries. We have written in the past about the turnaround happening at Inotiv spearheaded by CEO Bob Leasure who was hired in 2017. The company made a series of acquisitions in 2021 including Envigo, a purveyor of research models. We believe that Envigo has underappreciated pricing power across its business. The supply chain has been disrupted by COVID-19 at a time when demand for certain research models is high. In aggregate, we expect Inotiv to exceed the current consensus sales estimate in 2022 by $100 million or roughly 20%. We are modeling sales in 2022 to approach $575 million with an operating profit of almost $65 million (11% margin). Inotiv’s stock has declined by over 50% since November and we believe the shares are undervalued at current levels. We expect the company to generate free cash flow per share of $1.25 in 2022 and over $2.00 in 2023. The drivers of free cash flow growth include better capacity utilization through increased scale along with the embedded pricing power in the Envigo business. Our price target of $70 remains unchanged.”
Our calculations show that Inotiv, Inc. (NASDAQ: NOTV) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. NOTV was in 14 hedge fund portfolios at the end of the third quarter of 2021, compared to 12 funds in the previous quarter. Inotiv, Inc. (NASDAQ: NOTV) delivered a -37.97% return in the past 3 months. In October 2021, we also shared another hedge fund’s views on NOTV in another article.
4. CatchMark Timber Trust, Inc. (CTT)
Third Avenue Management Real Estate Value Fund, in its Q4 2021 investor letter, mentioned CatchMark Timber Trust, Inc. (NYSE: CTT) and discussed its stance on the firm. CatchMark Timber Trust, Inc. is a Atlanta, Georgia-based real estate investment trust company with a $396.4 million market capitalization. CTT delivered a -6.89% return since the beginning of the year, while its 12-month returns are down by -22.09%. The stock closed at $8.11 per share on February 4, 2022.
Here is what Third Avenue Management Real Estate Value Fund has to say about CatchMark Timber Trust, Inc. in its Q4 2021 investor letter:
“Founded in 2005 and listed in 2013, Catchmark Timber Trust Inc. (“Catchmark”) is a US-based REIT that owns approximately 370,000 acres of productive timberlands in the US South. These holdings are primarily located in some of the top “wood baskets” in Georgia, South Carolina, and Alabama where the company primarily grows and harvests Southern Yellow Pine (“SYP”) that is used in residential and commercial construction, as well as pulp and paper products.
Although Catchmark is a “pure-play” owner of Southern timberlands today, the company’s path to arrive here has not been without challenges. Most notably, Catchmark was required to book a significant impairment on its previous $200 million subordinated investment in the 1.1 million acre “Triple T” venture, which seemingly led to Executive and Board changes. Further, the existing control group had to take other actions to “right size” its balance sheet and payout ratios by selling off non-core timberlands—as well cutting the company’s dividend by 50% in the most recent quarter.
These moves were undoubtedly in the interests of long-term holders, but they unavoidably led to pressure on the company’s shares—which appeared to be further exacerbated when Catchmark was removed from a major real estate index in November. Alongside these developments, Catchmark common declined by more than 40% during the quarter, allowing the Fund to initiate a position at prices that seemed rather compelling relative to a conservative estimate of Catchmark’s NAV…” (Click here to see the full text)
Our calculations show that CatchMark Timber Trust, Inc. (NYSE: CTT) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. CTT was in 9 hedge fund portfolios at the end of the third quarter of 2021, compared to 12 funds in the previous quarter. CatchMark Timber Trust, Inc. (NYSE: CTT) delivered a -9.59% return in the past 3 months. In December 2021, we also shared another hedge fund’s views on CTT in another article.
3. LendingTree (TREE)
Bernzott Capital Advisors US Small Cap Value, in its Q4 2021 investor letter, mentioned LendingTree, Inc. (NASDAQ: TREE) and discussed its stance on the firm. LendingTree, Inc. is a Charlotte, North Carolina-based online lending company with a $1.6 billion market capitalization. TREE delivered a 2.12% return since the beginning of the year, while its 12-month returns are down by -63.46%. The stock closed at $125.20 per share on February 4, 2022.
Here is what Bernzott Capital Advisors US Small Cap Value has to say about LendingTree, Inc. in its Q4 2021 investor letter:
“LendingTree (TREE): The company faced headwinds across its business, including reduced demand for personal loans due to federal government stimulus payments, a pause in insurance lead demand as insurers prepared for price increases, and mixed demand for mortgage leads as lenders were running near capacity and not chasing new business. Meanwhile, expenses were pressured by continued investment in growth initiatives in health and insurance. As a result, the price has been weak and valuation has compressed below five-year averages. Several business drivers appear to be bottoming and look poised for growth which should help drive a recovery in the stock price.”
Photo by Karolina Grabowska from Pexels
Our calculations show that LendingTree, Inc. (NASDAQ: TREE) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. TREE was in 24 hedge fund portfolios at the end of the third quarter of 2021, compared to 30 funds in the previous quarter. LendingTree, Inc. (NASDAQ: TREE) delivered a -16.48% return in the past 3 months. In November 2021, we also shared another hedge fund’s views on TREE in another article.
2. Uber Technologies, Inc. (UBER)
RiverPark Large Growth Fund, in its Q4 2021 investor letter, mentioned Uber Technologies, Inc. (NYSE: UBER) and discussed its stance on the firm. Uber Technologies, Inc. is a San Francisco, California-based transport company with a $71.8 billion market capitalization. UBER delivered a -11.64% return since the beginning of the year, while its 12-month returns are down by -36.75%. The stock closed at $37.05 per share on February 4, 2022.
Here is what RiverPark Large Growth Fund has to say about Uber Technologies, Inc. in its Q4 2021 investor letter:
“Uber: UBER shares were under pressure throughout 2H21 despite the fact that delivery growth remains strong and ride sharing has begun to recover. Gross bookings in the company’s most recently reported quarter doubled to 57% year over year, driven by 50% Delivery growth and 67% Rides growth.
Despite the COVID disruption, UBER remains the undisputed global leader in ride sharing, with greater than 50% share in every major region in which it operates. The company is also a leader in food delivery (56% of 3Q21 revenue), where it is number one or two in the more than 25 countries in which it operates. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its more than 100 million users (by comparison, Amazon Prime has 130+ million members) and penetrate new markets of ondemand services, such as grocery delivery, truck brokerage and worker staffing for shift work.
UBER, at its current $85 billion market capitalization, trades at just over 3x next year’s revenue from its two core businesses. Additionally, the company has substantial, unrecognized, value in its several nascent development businesses and another $12 billion in equity stakes in synergistic businesses around the world.”
Our calculations show that Uber Technologies, Inc. (NYSE: UBER) ranks 7th on our list of the 30 Most Popular Stocks Among Hedge Funds. UBER was in 143 hedge fund portfolios at the end of the third quarter of 2021, compared to 139 funds in the previous quarter. Uber Technologies, Inc. (NYSE: UBER) delivered a -21.49% return in the past 3 months. In January 2022, we also shared another hedge fund’s views on UBER in another article.
1. Pinterest (PINS)
VGI Partners, in its Q4 2021 investor letter, mentioned Pinterest, Inc. (NYSE: PINS) and discussed its stance on the firm. This is the second time this week a fund manager talked strongly about Pinterest which is why the stock is placed at the #1 spot on our list.
Here is what VGI Partners has to say about Pinterest, Inc. in its Q4 2021 investor letter:
“Pinterest is a holding we have discussed in detail previously but, given it was the largest portfolio detractor in 2021, we believe it warrants a detailed update. We continue to believe Pinterest is a unique visual search engine with its ~450 million monthly active users (MAUs), and is a highly differentiated platform, uniquely combining search with the network effects of a social media platform.
Most users visit the platform with a specific purpose and typically use the platform for inspiration. Compared to other social networks, purchase intent is high, with approximately 55% of Pinterest users on the platform there to find or purchase products or services. The high purchase intent of the user has made Pinterest an increasingly attractive place for brands to advertise – it is arguably the only platform where advertisements do not damage the user experience and in fact improve it (arguably alongside Google). It also happens to be a relatively safe space to advertise online, with minimal to no abusive or controversial content present on the platform.
This has resulted in significant improvement in monetisation, with revenues growing by over 5 times since 2016 and by almost 50% in both 2020 and 2021. Notwithstanding this, the stock has performed poorly over the last 12 months due to user growth coming to a halt. As users were locked down at home during COVID outbreaks, Pinterest benefited from rapid growth in engagement, for instance users stuck at home looking for inspiration on a home renovation. On the other side of lockdowns, some of Pinterest’s more casual users have returned to normal routines and reduced their usage of the platform…” (Click here to see the full text)
Our calculations show that Pinterest, Inc. (NYSE: PINS) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. PINS was in 58 hedge fund portfolios at the end of the third quarter of 2021, compared to 63 funds in the previous quarter. Pinterest, Inc. (NYSE: PINS) delivered a -32.33% return in the past 3 months. This may be the time to get back into PINS.
Don’t forget to check out our collection of 2021 Q4 Hedge Fund Investor Letters and 10 Stocks To Buy Amid Rising Interest Rates.
Disclosure: None.
