Investment management company Cove Street Capital recently released its “Small Cap Value Fund” third quarter 2023 investor letter. A copy of the same can be downloaded here. During the calendar third quarter of 2023, financial markets were chaotic, causing CSC shareholders to lose some gains from the first half, both relatively and absolutely. In the third quarter, the fund delivered -7.48% compared to a -5.13% return for the Russell 2000 Index and a -2.96% return for the Russell 2000 Value Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Cove Street Small Cap Value Fund highlighted stocks like Viasat, Inc. (NASDAQ:VSAT) in the third quarter 2023 investor letter. Headquartered in Carlsbad, California, Viasat, Inc. (NASDAQ:VSAT) engages in providing communications technologies and services. On October 9, 2023, Viasat, Inc. (NASDAQ:VSAT) stock closed at $15.96 per share. One-month return of Viasat, Inc. (NASDAQ:VSAT) was -31.06%, and its shares lost 57.70% of their value over the last 52 weeks. Viasat, Inc. (NASDAQ:VSAT) has a market capitalization of $1.98 billion.
Cove Street Small Cap Value Fund made the following comment about Viasat, Inc. (NASDAQ:VSAT) in its Q3 2023 investor letter:
“We say around Cove Street Capital: certain things can only be explained as “off spreadsheet” events. That Viasat, Inc. (NASDAQ:VSAT) launched the first of its 3 satellite network flawlessly only to have a Northrup antenna fail – the first failure in 13 deployments- was not part of our investment narrative. While most costs are fully insured, the math on the actual cashflow produced by a giant increase in service capacity is pushed out to the right by at least 18 months. That is not a good thing. Now what are the odds that Inmarsat, which recently merged into Viasat, suffered what is likely to be a total failure after launch – the first in its 40- year history? Again, the satellite was insured for costs, but the delays clearly delayed a cashflow inflection point and thus decreased our present value.
Yes, we did increase our position and made Viasat our largest position prior to these launches. And yes, we sold 30% of the position in between launches to reflect a change in the time value of our money, and it became merely a “Top Ten” position.
And yes, the stock is stupid, stupid cheap with immense strategic value in a world of “more space.” The stock wakes up every day without memory and seeks to discount the future…and thus we endeavor to analyze the future in a probabilistic way, and weight positions appropriately given the risk / return balance. We think Viasat is a very good bet from here, just not our best, highest-conviction bet. We have taken tax losses in taxable accounts, but you will see this position back in portfolios again shortly after month end.”
A team of telecom engineers discussing a communication infrastructure diagram. Editorial photo for a financial news article. 8k. –ar 16:9
Viasat, Inc. (NASDAQ:VSAT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 13 hedge fund portfolios held Viasat, Inc. (NASDAQ:VSAT) at the end of the second quarter, which was 13 in the previous quarter.
We discussed Viasat, Inc. (NASDAQ:VSAT) in another article and shared the list of stocks billionaire Seth Klarman likes the most. In addition, please check out our hedge fund investor letters Q3 2023 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.
