Long Cast Advisers, an investment management firm, released its third quarter 2023 investor letter, a copy of which can be downloaded here. In the third quarter of 2023, ending September 30, cumulative net returns stood at 8%. Year-to-date returns up to the quarter’s conclusion reached 20%. Since its inception in November 2015 through the end of the third quarter in 2023, LCA has delivered a cumulative net return of 190%, equivalent to a 14% compound annual growth rate (CAGR) after accounting for fees. Take a moment to review the fund’s top 5 holdings to gain insights into their primary investment choices for 2023.
In its Q3 2023 investor letter, Long Cast Advisers mentioned Sono-Tek Corporation (NASDAQ:SOTK) and explained its insights for the company. Sono-Tek Corporation (NASDAQ:SOTK) is a Milton, New York-based liquid spray products developer and manufacturer with a $78.4 million market capitalization. Sono-Tek Corporation (NASDAQ:SOTK) delivered a -22.43% return since the beginning of the year, while its 12-month returns are down by -14.87%. The stock closed at $4.98 per share on November 9, 2023.
Here is what Long Cast Advisers has to say about Sono-Tek Corporation (NASDAQ:SOTK) in its Q3 2023 investor letter:
“Sono-Tek Corporation (NASDAQ:SOTK) is another company expanding its footprint and backlog. I last wrote about this in 4Q21. The Milton, NY based company historically made specialty nozzles for depositing specific and measured amounts of liquified materials. Over the last decade it has transitioned from just manufacturing nozzles for OEM’s to now designing, manufacturing and selling the units themselves. Two of their recent innovations are a roll to roll continuous system for fabric coating and a continuous glass coating system that is more precise and efficient than existing solutions on the market.
The company owns the industrial park from which it operates and over the last few years as tenant leases have lapsed, it has taken over more of its space for manufacturing. With year-end backlog at record highs, additional capacity and easy comparisons, significant growth in ’24 seems likely.
A near term opportunity, towards which there is some visibility, is customers going “from the lab to the production” i.e. they used SOTK equipment “in the lab” and now need larger higher priced units to produce at scale. I believe one can observe an example of this in process. Here’s a video from a start- up using SOTK equipment in the lab (the logo is covered in tape) and here’s a photo from an article about that company in Fast Company with a larger piece of SOTK equipment in the background (their equipment sprays on the materials to form a catalyst that looks like a large bike tire repair patch).
The long term opportunity, which in my view could yield multiples greater return, could occur if SOTK’s spray deposition can replace some portion for the large market for higher cost batch process vacuum deposition. I believe that the company is pursuing R&D and / or license deals pursing this opportunity. In the meantime, without regard for any unknowable future, you have a profitable company funding its own growth, operating with a healthy balance sheet and patiently developing solutions around a core skillset. These are the kinds of things that favorably tilt the odds towards long term value creation.”
Closeup of a software engineer in front of a laptop coding a modern platform.
Our calculations show that Sono-Tek Corporation (NASDAQ:SOTK) does not belong on our list of the 30 Most Popular Stocks Among Hedge Funds. Sono-Tek Corporation (NASDAQ:SOTK) was in 1 hedge fund portfolio at the end of the second quarter of 2023, compared to 1 fund in the previous quarter. Sono-Tek Corporation (NASDAQ:SOTK) delivered an 8.38% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q3 2023 page.
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Disclosure: None. This article is originally published at Insider Monkey.
