Alluvial Capital Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A return of 8.5% was delivered by the fund for the third quarter of 2021, as small-cap and micro-cap stock indexes struggled. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Alluvial Capital Management, in its Q3 2021 investor letter, mentioned Nuvera Communications, Inc. (NYSE: NUVR) and discussed its stance on the firm. Nuvera Communications, Inc. is a New Ulm, Minnesota-based communication solutions provider with a $114.4 million market capitalization. NUVR delivered a 13.83% return since the beginning of the year, while its 12-month returns are up by 24.69%. The stock closed at $21.97 per share on November 12, 2010.
Here is what Alluvial Capital Management has to say about Nuvera Communications, Inc. in its Q3 2021 investor letter:
“We are parting ways with our other domestic telecom, Nuvera Communications. Not for any particular failing by the company or concerns about valuation, but rather a loss of credibility. Over the years, management has assured me repeatedly that Nuvera would step into the spotlight, quit being the “quiet company” and begin telling its story to investors. Also, that the company would be active on the acquisitions front. Here we are, years later, with no changes and no activity. Nuvera still eschews press releases and any other attempt to build familiarity with investors. Even as Minnesota broadband mergers and acquisitions activity has heated up, Nuvera has sat on the sidelines. Any of a half dozen recent transactions in Minnesota would have been beneficial for Nuvera, but the company was either uninterested or unsuccessful in acquiring these assets. Meanwhile, the company’s balance sheet is rock solid with debt the lowest since the acquisition of Scott-Rice in 2018. To me, the economic rationale for acquiring assets at 6-10x free cash flow and funding these deals with debt at 4% is unassailable, but Nuvera apparently believes otherwise.
There is nothing really wrong with being a sleepy company. Countless tiny banks and utilities operate quietly, serving their communities well and paying regular dividends, but otherwise doing little for shareholders. But companies like these owe it to investors to be honest about their goals and ambitions so investors may value them accordingly. And so, on to the next opportunity, having realized a healthy gain on our Nuvera shares. I don’t doubt that Nuvera will do fine in the coming years, but we are attempting to do better than just “fine.”
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Based on our calculations, Nuvera Communications, Inc. (NYSE: NUVR) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Nuvera Communications, Inc. (NYSE: NUVR) delivered a -7.30% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
