Alluvial Capital Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A return of 8.5% was delivered by the fund for the third quarter of 2021, as small-cap and micro-cap stock indexes struggled. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Alluvial Capital Management, in its Q3 2021 investor letter, mentioned Wheeler Real Estate Investment Trust, Inc. (NASDAQ: WHLR) and discussed its stance on the firm. Wheeler Real Estate Investment Trust, Inc. is a Cleveland, Ohio-based investment holding company with a $24.9 million market capitalization. WHLR delivered a -7.22% return since the beginning of the year, while its 12-month returns are down by -25.51%. The stock closed at $2.57 per share on November 12, 2010.
Here is what Alluvial Capital Management has to say about Wheeler Real Estate Investment Trust, Inc. in its Q3 2021 investor letter:
“On the other hand, Series D preferred shares of Wheeler REIT trended slightly downward. The company and certain shareholders are at loggerheads over the treatment of Series A and B preferred shares, with a large holder threatening litigation. The most likely scenario in the months ahead remains a large repurchase of the Series D preferred shares, though it is also possible that a negotiated exchange agreement is reached with holders of the various series. Wheeler’s underlying properties must be worth at least $390 million or so for Series D preferreds to be worth at least their current trading price of $16. That is equal to 87% of gross property value and an implied cap rate of 9.5%. Wheeler’s grocery-anchored strip malls are nobody’s trophy assets, but they produce cash flow and are worth more than that. With a hard catalyst in the 2023 conversion option on the Series D preferreds, I am willing to wait for resolution.”
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Based on our calculations, Wheeler Real Estate Investment Trust, Inc. (NASDAQ: WHLR) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. WHLR was in 4 hedge fund portfolios at the end of the first half of 2021, compared to 2 funds in the previous quarter. Wheeler Real Estate Investment Trust, Inc. (NASDAQ: WHLR) delivered a -10.14% 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.
