Legacy Ridge Capital Management, LLC recently published its “Legacy Ridge Capital Partners Equity Fund I” second quarter 2023 investor letter, which can be downloaded here. For the first six months of 2023, the fund returned 15.8% gross, and 12.8% net compared to the S&P 500’s over 16% return. The firm’s goal is to have good absolute returns first and foremost, which should lead to good relative returns versus the broader markets. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Legacy Ridge Capital Management highlighted stocks like Equitrans Midstream Corporation (NYSE:ETRN) in the second quarter 2023 investor letter. Headquartered in Canonsburg, Pennsylvania, Equitrans Midstream Corporation (NYSE:ETRN) owns and operates midstream assets. On July 28, 2023, Equitrans Midstream Corporation (NYSE:ETRN) stock closed at $10.33 per share. One-month return of Equitrans Midstream Corporation (NYSE:ETRN) was 7.83%, and its shares gained 31.93% of their value over the last 52 weeks. Equitrans Midstream Corporation (NYSE:ETRN) has a market capitalization of $4.475 billion.
Legacy Ridge Capital Management made the following comment about Equitrans Midstream Corporation (NYSE:ETRN) in its second quarter 2023 investor letter:
“Equitrans Midstream Corporation (NYSE:ETRN) is a small position in the fund—less than 6%—and has been a decent contributor to performance YTD, but it hasn’t been a smooth ride in the least. ETRN is the operator and majority owner of the Mountain Valley Pipeline (MVP), a 303-mile natural gas pipeline proposed in 2014, approved by the FERC in 2017, and started construction in 2018. The estimated build cost was $3.5 billion, and the estimated completion date was early 2019. Now 4+ years behind schedule due to litigation and $3.1 billion OVER budget, and we might have line of sight to flowing gas by year-end 2023. Maybe. Section 324 of the Fiscal Responsibility Act expedited the completion of MVP by approving all remaining permits and by directing all appeals to the validity of the law to DC district courts. But it appears not even an act of Congress can get the final 10% of the project across the finish line. The 4th Circuit Court has once again issued a stay to halt construction as they consider arguments from environmental groups that the debt ceiling negotiation was unconstitutional.
We started buying ETRN in February 2022 around $7 a share and averaged down when presented the opportunity, resulting in an average cost basis of $6.87 on the common equity. In addition, we added call options to take advantage of the excess volatility, including Jan 24’ $5 strikes for $.55 per contract this past April when the stock fell to $4.60. While I’m generally opposed to catalyst driven investment theses, for some reason the math on this one made sense to me. In the event MVP was scrapped we thought the existing assets were worth $6 – $7 a share, and that the company could possibly maintain the dividend, or would for at least another several quarters, which provided a high-single-digit yield. In other words, at a mid-single-digit entry price we thought our downside was extremely limited…” (Click here to read the full text)
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Equitrans Midstream Corporation (NYSE:ETRN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 29 hedge fund portfolios held Equitrans Midstream Corporation (NYSE:ETRN) at the end of first quarter which was 30 in the previous quarter. In addition, please check out our hedge fund investor letters Q2 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.
