Investment management company Bireme Capital recently released its fourth-quarter 2023 investor letter. A copy of the same can be downloaded here. In 2023, the fund returned 21.3% net of fees underperforming the S&P 500’s 26.2%. The fund was up 448% net since inception in 2016 vs the S&P at 161%, an annual outperformance of 11.7%. Last year was the second calendar year in a row that the fund underperformed the S&P 500, and the first since 2019. Nonetheless, the firm is particularly proud of last year’s returns because 2023 was an extraordinarily tough year for the relative performance of active value managers. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Bireme Capital featured stocks such as Tootsie Roll Industries, Inc. (NYSE:TR) in the fourth quarter 2023 investor letter. Headquartered in Chicago, Illinois, Tootsie Roll Industries, Inc. (NYSE:TR) manufactures and distributes confectionery products. On February 6, 2024, Tootsie Roll Industries, Inc. (NYSE:TR) stock closed at $32.08 per share. One-month return of Tootsie Roll Industries, Inc. (NYSE:TR) was -6.93%, and its shares lost 27.63% of their value over the last 52 weeks. Tootsie Roll Industries, Inc. (NYSE:TR) has a market capitalization of $1.285 billion.
Bireme Capital stated the following regarding Tootsie Roll Industries, Inc. (NYSE:TR) in its fourth quarter 2023 investor letter:
“Tootsie Roll Industries, Inc. (NYSE:TR) is another overpriced staples stock that we shorted. Like Clorox, the company has pushed through price increases the last few years, but prior to that revenue was stagnant over a long period of time. Consumer trends do not bode well for sugary treats that are terrible for your health and your teeth. Despite the company’s low-growth track record, the stock trades at about 30x trailing earnings. On a FCF basis, the valuation looks more like 40x.
Investors are under the impression that these companies are a defensive investment because consumers will need to buy staples in any economic environment. However, this valuation-agnostic viewpoint is patently absurd at these valuations. Stocks that trade at growth-like valuations but have no prospect of real growth are in no way defensive. They share all of the downside of other richly valued stocks but none of the potential upside. In our view, these companies should be priced at a generous discount to bonds, rather than a substantial premium. With staples stocks still less than 10% from all-time highs, we expect the sector to continue to underperform.”
A hand reaching out to grab a packet of confectionery products from an overflowing display shelf.
Tootsie Roll Industries, Inc. (NYSE:TR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held Tootsie Roll Industries, Inc. (NYSE:TR) at the end of third quarter which was 16 in the previous quarter.
We discussed Tootsie Roll Industries, Inc. (NYSE:TR) in another article and shared the list of best confectionery, cookie and snack stocks to buy. 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.
