SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” second quarter 2023 investor letter. A copy of the same can be downloaded here. In the second quarter, the strategy returned 7.85% on a gross basis (7.65% net) compared to a 5.21% return for the Russell 2000 Index and 3.18% for the Russell 2000 Value Index. The strategy returned 24.28% on a gross basis (23.36% net) over the trailing twelve months compared to 12.31% and 6.01%, respectively, for the indexes. In addition, please check the top 5 holdings of the strategy to know its best pick in 2023.
SouthernSun Small Cap Strategy highlighted stocks like Ingevity Corporation (NYSE:NGVT) in the second quarter 2023 investor letter. Headquartered in North Charleston, South Carolina, Ingevity Corporation (NYSE:NGVT) is a specialty chemicals and carbon materials manufacturer. On August 1, 2023, Ingevity Corporation (NYSE:NGVT) stock closed at $62.37 per share. One-month return of Ingevity Corporation (NYSE:NGVT) was 8.27%, and its shares lost 11.63% of their value over the last 52 weeks. Ingevity Corporation (NYSE:NGVT) has a market capitalization of $2.251 billion.
SouthernSun Small Cap Strategy made the following comment about Ingevity Corporation (NYSE:NGVT) in its second quarter 2023 investor letter:
“Ingevity Corporation (NYSE:NGVT) was the top detractor in the Small Cap strategy in the second quarter. Ingevity manufactures specialty chemicals that are used in a wide range of industrial applications and consumer products including adhesives, detergents, agricultural chemicals, lubricants, asphalt paving products and oil well service additives. Ingevity also manufactures activated carbon used to reduce gasoline vapor emissions in automobiles. Ingevity’s recent results have been impacted by elevated raw material costs as crude tall oil prices have increased significantly over the last year. Management expects these prices to remain elevated due to increased demand for crude tall oil as a raw material in the biodiesel industry. To mitigate the impact of elevated prices, management has developed capabilities to use alternative fatty acid raw materials in its production process. In addition, management has an opportunity to shift some of its finished goods into the biodiesel market to take advantage of this growing demand. Also, we believe Ingevity’s activated carbon products sold into the automotive industry will continue to be a tailwind as global automotive production recovers from continued supply chain challenges. We recently had dinner with management while spending time with others on the management team earlier in the quarter. We spent significant time discussing financial flexibility and capital allocation and have independently updated several bear case scenarios to stress test the business in the coming quarters. While Ingevity may be challenged in the near term as they adjust production capacity, we believe the business is positioned to benefit from long-term trends and create significant value for shareholders.”
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Ingevity Corporation (NYSE:NGVT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 16 hedge fund portfolios held Ingevity Corporation (NYSE:NGVT) at the end of first quarter which was 20 in the previous quarter.
We discussed Ingevity Corporation (NYSE:NGVT) in another article and shared the list of stocks to buy according to Richard Scott Greeder’s Broad Bay Capital. In addition, please check out our hedge fund investor letters Q2 2023 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.
