Here’s Why L1 Capital Disposed its Aurizon Holdings (QRNNF) Stake

L1 Capital, an investment management firm, published its ‘L1 Long Short Fund Limited’ fourth quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net return of -1.7% was recorded by the fund for the fourth quarter of 2021, underperforming its S&P ASX 200 AI benchmark by -3.8%. The benchmark meanwhile had a 2.1% gain for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

L1 Capital Long Short Fund Limited, in its Q4 2021 investor letter, mentioned Aurizon Holdings Limited (NYSE: QRNNF) and discussed its stance on the firm. Aurizon Holdings Limited is a Queensland, Australia-based rail transport company with a $4.8 billion market capitalization. QRNNF delivered a -1.20% return since the beginning of the year, while its 12-month returns are down by -18.48%. The stock closed at $2.47 per share on February 11, 2022.

Here is what L1 Capital Long Short Fund Limited has to say about Aurizon Holdings Limited in its Q4 2021 investor letter:

“Aurizon (Long -8%) shares fell in October after announcing the purchase of One Rail Australia for $2.3b. Aurizon is Australia’s largest rail freight operator, with its main asset comprising the 2,670km Central Queensland Coal Network. We initially invested in Aurizon as we were attracted to its dominant rail infrastructure assets, conservative capital structure and strong dividend yield of ~7.5%. We were disappointed by the acquisition, given it reduces the company’s dividend for the next 1-2 years, uses up the company’s balance sheet capacity, was agreed at a premium multiple to comparable transactions and introduces substantial deal risk, with the requirement to divest the coal division (which comprises two thirds of the acquired asset base). We exited Aurizon during the quarter.”

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Our calculations show that Aurizon Holdings Limited (NYSE: QRNNF) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. Aurizon Holdings Limited (NYSE: QRNNF) delivered a -2.76% return in the past 3 months.

In October 2021, we published an article that includes QRNNF in the 11 Best High Dividend Stocks Under $50. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.