Patient Capital Management, a value investing firm, released its “Patient Capital Opportunity Equity Strategy” third quarter 2023 investor letter. A copy of the same can be downloaded here. During the quarter the strategy returned -6.0% net of fees compared to the S&P 500’s -3.3% return. As the quarter demonstrated, the markets are uncertain. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Patient Capital Management highlighted stocks like 2U, Inc. (NASDAQ:TWOU) in the third quarter 2023 investor letter. Headquartered in Lanham, Maryland, 2U, Inc. (NASDAQ:TWOU) an online education platform company. On November 1, 2023, 2U, Inc. (NASDAQ:TWOU) stock closed at $2.0200 per share. One-month return of 2U, Inc. (NASDAQ:TWOU) was -8.60%, and its shares lost 68.19% of their value over the last 52 weeks. 2U, Inc. (NASDAQ:TWOU) has a market capitalization of $164.468 million.
Patient Capital Management made the following comment about 2U, Inc. (NASDAQ:TWOU) in its Q3 2023 investor letter:
“We built a small position in 2U, Inc. (NASDAQ:TWOU) 2.25% Convertible Notes due May 2025 during the quarter. 2U is a top player in the online learning and education space. In 2021, the company acquired The Center for Reimagining Learning (edX platform) creating one of the world’s largest online learning platforms. We think this is a case of good company, bad balance sheet. The acquisition dramatically increased debt and the company wasn’t yet profitable. The company recently turned EBITDA profitable and expects to reach positive free cash flow by the end of this year. Despite this improvement, the company sits at an all-time low price as their high leverage (5x) and near-term debt maturities (~$760M in 2025/2026) create risk. We think in an adverse scenario, the converts should be fully covered and would wind up as equity. We believe progress on free cash flow and profits should create refinancing options or exchange opportunities before the first debt comes due (May 2025). The yield-to-maturity on the bonds ended the quarter close to 38%, a highly attractive return that compensates for the risk of adverse scenarios where things may get worse before they get better.”
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2U, Inc. (NASDAQ:TWOU) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held 2U, Inc. (NASDAQ:TWOU) at the end of second quarter which was 20 in the previous quarter.
We discussed 2U, Inc. (NASDAQ:TWOU) in another article and shared the list of best stocks to buy and hold for the next 15 years according to Cathie Wood’s portfolio. In addition, please check out our hedge fund investor letters Q3 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.
