Merion Road Capital, an investment advisor, released its fourth-quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, Merion Road Small Cap Fund returned -3.5% compared to a 6.2% return for the Russell 2000 Index and 3.2% for the Barclay Hedge Fund Index. Along with this, MRCM Long Only Large Cap returned -6.4% compared to a -4.9% return for the S&P 500 Index. For the full year 2022, Merion Road Small Cap Fund declined 17%, and MRCM Long Only Large Cap was down by 35%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Merion Road Capital highlighted stocks like Westwood Holdings Group, Inc. (NYSE:WHG) in the Q4 2022 investor letter. Based in Dallas, Texas, Westwood Holdings Group, Inc. (NYSE:WHG) is an investment management company. On January 16, 2023, Westwood Holdings Group, Inc. (NYSE:WHG) stock closed at $13.31 per share. One-month return of Westwood Holdings Group, Inc. (NYSE:WHG) was 33.15%, and its shares lost 31.79% of their value over the last 52 weeks. Westwood Holdings Group, Inc. (NYSE:WHG) has a market capitalization of $112.022 million.
Merion Road Capital made the following comment about Westwood Holdings Group, Inc. (NYSE:WHG) in its Q4 2022 investor letter:
“Westwood Holdings Group, Inc. (NYSE:WHG). WHG closed on the acquisition of Salient in November, increasing their assets under management from $12.3bn to $16.3bn. At these levels the company should generate about $90-$95mm in revenue, $12mm in EBITDA, and $1 per share in free cash flow. While AUM is dependent upon how the equity markets perform, I view this earnings level as a somewhat depressed figure. The Russell 2000 (they are primarily a small cap manager) fell 20% last year and, on a multi-year horizon, small caps have noticeably underperformed their counterparts. Furthermore, my analysis assumes a 13% EBITDA margin which is well below peers who operate in the 25-40% range. The primary reason for this difference is their asset per employee metric which sits at $130mm vs. industry norms of $200-$250mm. The industry is consolidating given these scale benefits. The stock ended the year at $11 and is trading at 7.5x free cash flow net of cash on the balance sheet.”
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Westwood Holdings Group, Inc. (NYSE:WHG) is not on our 30 Most Popular Stocks Among Hedge Funds list. As per our database, 6 hedge fund portfolios held Westwood Holdings Group, Inc. (NYSE:WHG) at the end of the third quarter, which was 7 in the previous quarter.
We discussed Westwood Holdings Group, Inc. (NYSE:WHG) in another article and shared Merion Road Capital’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q4 2022 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.
