Greystone Capital Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. During the third quarter of 2021, returns for separate accounts managed by Greystone Capital ranged from +0.06% to +5.4%. The median account return was +2.9%, net of fees. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Greystone Capital Management, in its Q3 2021 investor letter, mentioned Liberated Syndication Inc. (NYSE: LSYN) and discussed its stance on the firm. Liberated Syndication Inc. is a Pittsburgh, Pennsylvania-based IT service management company with a $95.7 million market capitalization. LSYN delivered a -33.82% return since the beginning of the year, while its 12-month returns are up by 2.86%. The stock closed at $3.60 per share on November 1, 2021.
Here is what Greystone Capital Management has to say about Liberated Syndication Inc. in its Q3 2021 investor letter:
“Throughout the past few months, I had been trimming client positions in Liberated Syndication to reduce our exposure to any potential deterioration in the core business that we might face once Libsyn finally filed up-to-date regulatory filings. As of today, we have fully exited. As a reminder, our ownership in Libsyn started as part special situation/part good business with elements of a turnaround (there was an incredible amount of low hanging fruit for management to address) that once addressed, could help shine light on both the strength of the core podcast hosting platform as well as management’s entrance into the podcast advertising and monetization spaces, where a new CEO (still yet to be hired) would help drive those initiatives forward. There is also a lawsuit being undertaken by the company set to meaningfully reduce the share count over the next year or so, further contributing to the attractiveness of the opportunity.
Were it not for the special situation elements, I doubt I would have made this investment as the podcast industry possesses a number of very difficult investment characteristics including plenty of competition, ow barriers to entry and a rapidly changing industry. In 2004, when Libsyn in was a first mover within the industry, those dynamics mattered less. In 2021, they matter a whole lot. I’d argue that the industry has changed quite a bit since our initial investment just last year. In addition, my worries about the core business have been exacerbated with new, mostly free hosting services rapidly taking share of new podcast users, and the overall business turnaround distracting management from focusing on the core business. I don’t believe this is an area where one can take their foot off the gas, and its possible too much damage has been done inside of the core business for Libsyn to now be a meaningful competitor in terms of podcast hosting. To management’s credit, they stepped up in a big way by making two acquisitions and purchasing a large number of shares (including doing a private placement where both management and another large technology focused activist fund participated) signaling at the very least their confidence in the setup. The acquisitions should also serve to add some revenue on top of what has been lost within the core podcast hosting business and may even offset any damage done there…” (Click here to see the full text)
Based on our calculations, Liberated Syndication Inc. (NYSE: LSYN) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Liberated Syndication Inc. (NYSE: LSYN) delivered a -3.49% 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.
