Rowan Street Capital, an investment management company, released its third-quarter 2022 investor letter. A copy of the same can be downloaded here. In the third quarter, the fund was down -4.3% compared to a -5.3% decline for the S&P 500 index. The Federal monetary policy affected the fund’s performance in the third quarter. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Rowan Street Capital discussed stocks like DocuSign, Inc. (NASDAQ:DOCU) in the third quarter 2022 investor letter. Headquartered in San Francisco, California, DocuSign, Inc. (NASDAQ:DOCU) is an electronic signature software providing company. On October 11, 2022, DocuSign, Inc. (NASDAQ:DOCU) stock closed at $44.54 per share. One-month return of DocuSign, Inc. (NASDAQ:DOCU) was -26.44% and its shares lost 82.82% of their value over the last 52 weeks. DocuSign, Inc. (NASDAQ:DOCU) has a market capitalization of $9.29 billion.
Here is what Rowan Street Capital specifically said about DocuSign, Inc. (NASDAQ:DOCU) in its Q3 2022 investor letter:
“In the case of DocuSign, Inc. (NASDAQ:DOCU), the “Management” part no longer satisfies our requirements in order to remain in our investment portfolio. In the past 6-9 months, the company has had a huge turnover in both employees and upper management. In June of 2021, the board decided to get rid of Dan Springer, who had been a CEO of DocuSign since 2017 and took the company public in 2018. We found this decision strange as we thought that he actually did a great job growing the company over the past 5 years (revenues grew almost 5x from $519 million in 2017 to an estimated $2.4 billion this year).
Dan was faced with a very difficult, unprecedented operating environment just like all the CEOs of SaaS companies. From Q2 ‘20 until Q3 ‘21, during pandemic shutdowns, growth exploded from about 30% to 60%+, as there was a ton of pull-forward demand. The business doubled in about 6 or 7 quarters! As the world opened up after the pandemic, growth slowed quite a bit especially in comparison to these abnormal pandemic quarters. However, on a 3 year CAGR basis, growth was still very healthy (sales grew from $974 million in 2019 to $2.5 billion expected in 2022). They also had to dramatically increase their sales force (biggest expense) to keep up with all this unexpected growth. New employees did not have a chance to be trained properly, but it still worked well as they had demand easily coming to them. Now that there is a very different demand environment, a lot of this salesforce either needs to be retrained for normal sales cycles (land and expand) or be replaced. Employee turnover also compounded with a lot of people who were with a company when stock was going up and up, and now that the stock is down so much from the highs, their stock options are no longer valuable. Having said this, we are not sure any other CEO could have done a better job managing through such a difficult operating environment…” (Click here to read the full text)
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DocuSign, Inc. (NASDAQ:DOCU) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held DocuSign, Inc. (NASDAQ:DOCU) at the end of the second quarter, which was 45 in the previous quarter.
We discussed DocuSign, Inc. (NASDAQ:DOCU) in another article and shared stocks recently downgraded by analysts. In addition, please check out our hedge fund investor letters Q3 2022 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.
