Praetorian Capital, an investment management company, released its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. For the full year, the fund lost 10.55% net of fees. The fund was down by 14.76% net of fees in the fourth quarter. It compounded capital at a 41.76% annual net rate, since inception. The core portfolio positions mostly declined in the quarter, while the event-driven book produced a slightly positive return. The core portfolio positions overall decreased over the course of the year, but the losses in the core book were offset by the event-driven book. For more information on the fund’s top picks in 2024, please check its top five holdings.
Praetorian Capital highlighted stocks like A-Mark Precious Metals, Inc. (NASDAQ:AMRK), in the fourth quarter 2024 investor letter. A-Mark Precious Metals, Inc. (NASDAQ:AMRK) is a precious metals trading company. The one-month return of A-Mark Precious Metals, Inc. (NASDAQ:AMRK) was 1.03%, and its shares lost 3.71% of their value over the last 52 weeks. On January 13, 2025, A-Mark Precious Metals, Inc. (NASDAQ:AMRK) stock closed at $27.73 per share with a market capitalization of $642.895 million.
Praetorian Capital stated the following regarding A-Mark Precious Metals, Inc. (NASDAQ:AMRK) in its Q4 2024 investor letter:
“As the world gets increasingly crazy, I believe that people will come to realize that ownership of precious metals in physical form, as opposed to in a brokerage account, is part of being financially prudent. They will mostly likely buy those coins from a coin dealer, either in person, or online. A-Mark Precious Metals, Inc. (NASDAQ:AMRK) supplies both of those markets as one of the largest players in online coin brokerage through their JM Bullion, LPM, Silver Gold Bull, Goldline, etc. verticals, along with serving as one of the largest wholesalers to local coin shops. A-Mark also has stakes in two mints (Silver Towne and Sunshine).
A-Mark benefits from periods of chaos in two ways. They see transaction volumes increase, and they see the spreads that they can charge widen. During the three years from Fiscal 2021 to 2023, A-Mark earned approximately $7 a share per year on average if you adjust for certain non-recurring items and remove non-cash intangible amortization. We acquired our shares for approximately four times this earnings level, which seems quite cheap for a business with such high returns on capital. That said, the business has seen reduced earnings over the past few quarters, as a result of declining transaction volumes and spreads. I believe that this decline in activity has created a unique opportunity to buy a high-quality business, with substantial insider ownership, at a bargain price. I naturally am enamored of the counter-cyclical nature of the business, which hopefully should help offset the risks to our portfolio in future periods of crisis.
I believe that this business can earn as much as $10 a share in such a period of crisis, and get a healthy multiple applied to it.
For years, I have sought out a way to play an increase in the prices of precious metals, without the risks of owning a mine. I believe that A-Mark is the ideal proxy for this view and as other investors discover it, the valuation will re-rate.”
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A-Mark Precious Metals, Inc. (NASDAQ:AMRK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held A-Mark Precious Metals, Inc. (NASDAQ:AMRK) at the end of the second quarter which was 17 in the previous quarter. In the fiscal first quarter 0f 2025, A-Mark Precious Metals, Inc. (NASDAQ:AMRK) reported $2.72 billion in revenues, up 9% from prior year’s quarter. While we acknowledge the potential of A-Mark Precious Metals, Inc. (NASDAQ:AMRK) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed A-Mark Precious Metals, Inc. (NASDAQ:AMRK) and shared Night Watch Investment Management’s views on the company. In addition, please check out our hedge fund investor letters Q4 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.