O’keefe Stevens Advisory, an investment advisory firm, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the Q3 letter, O’Keefe Stevens discussed its investment in Graftech (EAF). The firm admits that its investment thesis for the company was wrong and that the near-term viability of the business is in question. Even though this kind of loss is difficult, the firm hopes that the lessons learned will help avoid similar ventures in the future. For more information on the fund’s top picks in 2024, please check its top five holdings.
O’keefe Stevens Advisory highlighted stocks like GrafTech International Ltd. (NYSE:EAF), in the third quarter 2024 investor letter. Headquartered in Brooklyn Heights, Ohio, GrafTech International Ltd. (NYSE:EAF) develops, manufactures, and distributes graphite and carbon-based solutions. The one-month return of GrafTech International Ltd. (NYSE:EAF) was 81.37%, and its shares lost 58.40% of their value over the last 52 weeks. On October 14, 2024, GrafTech International Ltd. (NYSE:EAF) stock closed at $1.46 per share with a market capitalization of $375.464 million.
O’keefe Stevens Advisory stated the following regarding GrafTech International Ltd. (NYSE:EAF) in its Q3 2024 investor letter:
“A name we’ve discussed on several occasions will no longer be, as we sold our stake in GrafTech International Ltd. (NYSE:EAF) during the quarter. Long-term investment success is often shaped by a series of short-term events, most of which have been negative for this holding over the past three years. Purchases are underwritten based on a 3-5-year holding period, allowing for short-term headwinds to abate, market pessimism to subside, and long-term business results to dominate the discussion and stock price. We made our initial purchase at an unthinkable price of $12/share.
Initial thesis 1. Graftech’s vertical integration with Seadrift and the production of Needle Coke provided a competitive advantage and lower operating costs. a. Reality – While still potentially the case, weak demand for electric vehicles has resulted in a healthy supply of needle coke. In a market where electrode demand is simultaneously weak, the added fixed cost of running Seadrift is a drag on profitability. In a supply-constrained market, Seadrift will undoubtedly be an advantage; however, today it is not…” (Click here to read the full text)
A close up of a carbon-based solution as it gets released from a nozzle into a mould.
GrafTech International Ltd. (NYSE:EAF) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 13 hedge fund portfolios held GrafTech International Ltd. (NYSE:EAF) at the end of the second quarter which was 15 in the previous quarter. While we acknowledge the potential of GrafTech International Ltd. (NYSE:EAF) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article we discussed GrafTech International Ltd. (NYSE:EAF) and shared O’keefe Stevens Advisory’s views on the company in Q1 2024. In addition, please check out our hedge fund investor letters Q3 2024 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.