White Falcon Capital Management, an investment fund manager, released its fourth quarter 2023 investor letter. A copy of the same can be downloaded here. In 2023, the fund was up 36.0% compared to the S&P 500 (CAD), the MSCI All Country (CAD), and the S&P TSX’s returns of 23.2%, 18.5%, and 11.8%, respectively. The portfolio benefited from technology stocks during the year. In addition, please check the fund’s top five holdings to know its best picks in 2023.
White Falcon Capital Management featured stocks such as Rover Group, Inc. (NASDAQ:ROVR) in the fourth quarter 2023 investor letter. Headquartered in Seattle, Washington, Rover Group, Inc. (NASDAQ:ROVR) is an online marketplace for pet care. On January 17, 2024, Rover Group, Inc. (NASDAQ:ROVR) stock closed at $10.92 per share. One-month return of Rover Group, Inc. (NASDAQ:ROVR) was -0.27%, and its shares gained 205.03% of their value over the last 52 weeks. Rover Group, Inc. (NASDAQ:ROVR) has a market capitalization of $1.97 billion.
White Falcon Capital Management stated the following regarding Rover Group, Inc. (NASDAQ:ROVR) in its fourth quarter 2023 investor letter:
“Rover Group, Inc. (NASDAQ:ROVR) provides an interesting case study that aptly showcases the evolving nature of value investing. Our average cost on Rover was about $4.3 per share and we featured Rover in our Q3 2023 letter when it was trading at $6.5 per share. In November 2023, Blackstone made a cash offer for Rover at $11 per share. By definition – as this was a cash offer – Rover was a value stock at the time we featured it last quarter and perhaps a deep value stock at our cost base. Even at $11 per share, we believe Blackstone got a very good deal and were sad to see us robbed of many years of compounding. However, in November 2023, from a headline perspective, Rover did not screen well as a value stock as it was trading at 19x EV/EBITDA and 60x P/E.
We argued in our report that Rover is underearning due to which looking at the headline valuation metrics is not appropriate. In fact, we believed that Rover had the potential to achieve 30%+ adj. EBITDA margins (vs. 10% reported). In an environment where businesses are directing investments through the income statement, the lesson from Rover is that value investors must extend their analysis beyond the surface-level reported numbers and delve into the genuine earning potential of a business.”
A pet parent walking with their dog in a park, a reminder of the company’s care services.
Rover Group, Inc. (NASDAQ:ROVR) is not our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Rover Group, Inc. (NASDAQ:ROVR) at the end of third quarter which was 25 in the previous quarter.
We discussed Rover Group, Inc. (NASDAQ:ROVR) in another article and shared the list of best growth stocks under $25. In addition, please check out our hedge fund investor letters Q4 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.
