Voss Capital, LLC an investment management company, released its first-quarter 2024 investor letter. A copy of the letter can be downloaded here. Voss Capital’s funds, Voss Value Fund, LP, and the Voss Value Offshore Fund, Ltd returned +9.2% and +9.0% to investors net of fees and expenses respectively, in the first quarter compared to a +5.2% return for the Russell 2000 Index, 2.9% return for the Russell 2000 Value Index, and +10.6% return for the S&P 500 Index. The fund’s total gross exposure stood at 167.8% and the net long exposure was 92.9% at the end of the first quarter. The weight of the fund’s top 10 longs was 81.1% and the top 10 shorts was 24.2%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Voss Capital highlighted stocks like Alta Equipment Group Inc. (NYSE:ALTG) in the first quarter 2024 investor letter. Alta Equipment Group Inc. (NYSE:ALTG) operates integrated equipment dealership platforms. Alta Equipment Group Inc. (NYSE:ALTG) one-month return was -29.13%, and its shares lost 40.64% of their value over the last 52 weeks. On May 31, 2024, Alta Equipment Group Inc. (NYSE:ALTG) stock closed at $8.44 per share with a market capitalization of $279.43 million.
Voss Capital stated the following regarding Alta Equipment Group Inc. (NYSE:ALTG) in its first quarter 2024 investor letter:
“Alta Equipment Group Inc. (NYSE:ALTG) has been a large detractor for the Funds. ALTG reported Q1 results recently and tightened the top end of the range of its full year EBITDA guidance by less than 2%. The mid-point of guidance was still above Wall Street’s consensus, but the stock has fallen ~30% after reporting with shares now close to 4x EBITDA. Results were weak in Alta’s higher margin distribution segment as the space got saturated with inventory. Another area that spooked investors was comments about gross margin reversion in new construction equipment sales, which accounts for only ~15% of total gross profit and something we mistakenly thought was more widely anticipated (e.g., obvious) and thus priced in. We believe that ALTG will continue to show resilient parts & service revenue growth due to the extreme pace of new equipment sales over the last several years (a ~43% CAGR since 2019). The stock screen poorly as ~$400M of their debt is “good debt” – floor plan / inventory financing that is tied to specific pieces of equipment and subsidized by OEM partners. We think the company needs to demonstrate better operating leverage against the cost base, but the P&S ballast and forthcoming revenue mix-shift will drag margins higher, and along with generating meaningful free cash flow and paying down debt (>30% levered FCF yield on consensus 2025 numbers) as growth slows, will help the shares re-rate from a distress level valuation. The stock has >100% upside to a base case fair value of 6x EBITDA.”
A warehouse manager inspecting a design and structure of a modern warehouse.
Alta Equipment Group Inc. (NYSE:ALTG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Alta Equipment Group Inc. (NYSE:ALTG) at the end of the first quarter which was 14 in the previous quarter.
Alta Equipment Group Inc. (NYSE:ALTG) generated $441.6 million in revenues in the first quarter up $21 million or 5% compared to Q1 2023. In addition, please check out our hedge fund investor letters Q1 2024 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.
