Laughing Water Capital, an investment management company, released its first-quarter 2024 investor letter. A copy of the same can be downloaded here. In the first quarter, investment in the fund returned 8.4% after all fees and expenses compared to 10.6% and 5.2% returns for the SP500TR and R2000 during the quarter, respectively. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Laughing Water Capital featured stocks like Avid Bioservices, Inc. (NASDAQ:CDMO) in the first quarter 2024 investor letter. Headquartered in Tustin, California, Avid Bioservices, Inc. (NASDAQ:CDMO) is a contract development and manufacturing organization. On May 2, 2024, Avid Bioservices, Inc. (NASDAQ:CDMO) stock closed at $8.20 per share. One-month return of Avid Bioservices, Inc. (NASDAQ:CDMO) was 29.34%, and its shares lost 55.77% of their value over the last 52 weeks. Avid Bioservices, Inc. (NASDAQ:CDMO) has a market capitalization of $520.534 million.
Laughing Water Capital stated the following regarding Avid Bioservices, Inc. (NASDAQ:CDMO) in its first quarter 2024 investor letter:
“As you know, a large portion of our portfolio is invested in Contract Drug Manufacturing Organizations (CDMOs) tied to biologic, or large molecule, pharmaceuticals; specifically, we own shares in Lifecore Biomedical (LFCR), a CDMO focused on fill-finish work for injectable drugs, and Avid Bioservices, Inc. (NASDAQ:CDMO), which is focused on disposable drug substance manufacturing. I am attracted to these investments because at scale, late stage and commercial business is relatively recession resistant (customers do not stop funding drugs that are close to approval, and patients do not stop taking their prescriptions during economic downturns), customers are extremely sticky (moving to a new manufacturer requires an FDA review), the industry is set to benefit from tremendous tailwinds (more than half of the drugs currently in development are large molecule, large molecules are underpenetrated globally), and historically competition has been rational (capacity is rarely built on spec – rather, CDMOs add capacity when their customers ask them to).
Further, while at present both LFCR and CDMO are not generating much cash and thus “screen” poorly, both have available capacity at a time when capacity is scarce, and should benefit from tremendous operating leverage over the next few years as this new capacity is filled up. Importantly, industry dynamics as well as increasing amounts of detail on their respective pipelines suggest that for both companies filling their capacity is very much a “when” rather than an “if.” The thesis for both names is thus that we are just a few years away from large amounts of relatively sticky free cash flow, that should deserve a high multiple…” (Click here to read the full text)
A chemist looking through a microscope in a research and development facility as they synthesize recombinant proteins.
Avid Bioservices, Inc. (NASDAQ:CDMO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Avid Bioservices, Inc. (NASDAQ:CDMO) at the end of the fourth quarter which was 17 in the previous quarter.
We previously discussed Avid Bioservices, Inc. (NASDAQ:CDMO) in another article, where we shared Laughing Water Capital’s views on the company. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
