Maran Capital Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. In the third quarter of 2021, Maran Partners Fund returned -3.1%, net of all fees and expenses, which brings the year-to-date return to +48.3%, net. Over the past five years, the fund has compounded at the annualized rate of +22.2%, net of all fees and expenses. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Maran Capital Management, in its Q3 2021 investor letter, mentioned Crossroads Systems, Inc. (NYSE: CRSS) and discussed its stance on the firm. Crossroads Systems, Inc. is a Dallas, Texas-based holding company with a $113.4 million market capitalization. CRSS delivered a 94.87% return since the beginning of the year, while its 12-month returns are up by 111.11%. The stock closed at $18.50 per share on November 1, 2021.
Here is what Maran Capital Management has to say about Crossroads Systems, Inc. in its Q3 2021 investor letter:
“I discussed CRSS last quarter, a core holding turned special situation as the company paid out a $40/sh special dividend. Our investment in the company was predicated on a strong niche business and a highly aligned management team and board, coupled with an attractive valuation.
The company’s entrée into small business lending via the PPP program fundamentally changed the business. CRSS’s success in the first half of 2021 laid the groundwork for it to reposition itself with a broader mandate.
Crossroads remains an ESG-friendly Community Development Financial Institution (CDFI) but now has greater resources and reach. It also has approximately 500,000 new customer relationships with small businesses and sole proprietors that it obtained through its participation in the PPP program.
During the quarter, CRSS announced a partnership with Enhanced Capital Group, a “socially responsible” asset manager focused on underserved businesses which will expand CRSS’s credit assets. CRSS also announced the acquisition of Rise Line Credit, an asset-based lending firm. I believe the company’s aspirations are higher still, and that these developments are just the beginning of CRSS’s ongoing transformation. I’m excited to go along for the ride with the CRSS team on the company’s next chapter.”
Based on our calculations, Crossroads Systems, Inc. (NYSE: CRSS) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Crossroads Systems, Inc. (NYSE: CRSS) delivered a -25.78% 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.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. Recently we came across a high-growth stock that has tons of hidden assets and is trading at an extremely cheap valuation. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.
Disclosure: None. This article is originally published at Insider Monkey.
