Third Avenue Management recently released its Q1 2020 Investor Letter, a copy of which you can download here. The Third Avenue Value Fund posted a return of -42.08% for the quarter, underperforming its benchmark, the MSCI World Index which returned -20.95% in the same quarter. You should check out Third Avenue Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.
In the said letter, Third Avenue Management highlighted a few stocks and FedEx Corp (NYSE:FDX) is one of them. FedEx is a delivery services company. Year-to-date, FedEx Corp (NYSE:FDX) stock lost 12.4% and on June 12th it had a closing price of $132.72. Here is what Third Avenue Management said:
“FedEx operates one of the world’s largest package delivery and logistics businesses. Beginning in the early 1970s, founder Fred Smith began building a network of sorting facilities, aircraft and last-mile capabilities that has become one of very few key players in an oligopolistic market dominated by operators who have scale and control of a variety of key assets that are virtually impossible to replicate. In spite of its record of creating extraordinary shareholder value over decades, FedEx has had a number of operational headwinds over the last few years. First, the expansion and evolution of its ground delivery services in order to meet rapidly growing ecommerce demand has required costly investment and created inefficiencies in the FedEx Ground network in the near-term. Secondly, in 2016, FedEx acquired TNT to expand its European operations and grow scale within its FedEx Express line of business. This is a business that was already inherently less profitable and more capital intensive than its FedEx Ground business. From an integration perspective, the TNT acquisition has proved more difficult and a larger headwind to operating performance than anticipated. Meanwhile, political impediments to global trade in 2019 compounded the challenges for FedEx Express, which is primarily a business to business service. We have developed the view that FedEx’s substantial investments to continue supremacy for decades to come in an evolving ecommerce market place are sensible and strategic. We also believe that the costs associated with the TNT integration will dissipate in coming quarters and that FedEx management is strategically positioning FedEx to maintain its critical status in the secularly growing package delivery oligopoly. Over time we would expect FedEx to navigate a return towards historical levels of profitability and returns on capital, in addition to meaningfully growing overall business volume in the future. Our estimates suggest that this should also result in a substantially higher share price. As it stands today, the company is valued at roughly 10x depressed trailing earnings.”
In Q1 2020, the number of bullish hedge fund positions on FedEx Corp (NYSE:FDX) stock increased by about 11% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with FedEx’s growth potential. Our calculations showed that FedEx Corp (NYSE:FDX) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.
