SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun SMID Cap Strategy” second quarter 2023 investor letter. A copy of the same can be downloaded here. In the second quarter, the strategy returned 11.26% on a gross basis (11.04% net) compared to a 5.22% return for the Russell 2500 Index and 4.37% for the Russell 2500 Value Index. Since its inception, the strategy has continued to outperform both indexes on an annualized gross and net basis. The strategy returned 27.17% on a gross basis (26.29% net) over the trailing twelve months compared to 13.58% and 10.37% returns for indexes, respectively. In addition, please check the top 5 holdings of the strategy to know its best pick in 2023.
SouthernSun SMID Cap Strategy highlighted stocks like Trex Company, Inc. (NYSE:TREX) in the second quarter 2023 investor letter. Headquartered in Winchester, Virginia, Trex Company, Inc. (NYSE:TREX) is a decking, railing, and outdoor living products and accessories manufacturer. On August 1, 2023, Trex Company, Inc. (NYSE:TREX) stock closed at $75.95 per share. One-month return of Trex Company, Inc. (NYSE:TREX) was 16.11%, and its shares gained 17.68% of their value over the last 52 weeks. Trex Company, Inc. (NYSE:TREX) has a market capitalization of $8.135 billion.
SouthernSun SMID Cap Strategy made the following comment about Trex Company, Inc. (NYSE:TREX) in its second quarter 2023 investor letter:
“Trex Company, Inc. (NYSE:TREX), the world’s largest manufacturer of composite wood decking, was one of the top contributors in the SMID cap strategy in the second quarter. Trex reported results for the first quarter of 2023 that exhibited the flexibility of its cost structure, as margins held up despite significantly lower sales. Sell through demand for decking products remains relatively solid, and much of the weakness in Trex sales performance is a result of Trex’s dealer channel carrying lower inventory than they would historically, due to a cautious market outlook. We believe management’s response to this lower demand from its channel partners has been prudent. The company invested in inventory to remain in position to properly service customers in the event demand rises, while also keeping its balance sheet strong enough to withstand a longer downturn, e.g. by slowing the amount of share repurchases made in the quarter.”
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Trex Company, Inc. (NYSE:TREX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held Trex Company, Inc. (NYSE:TREX) at the end of first quarter which was 34 in the previous quarter.
We discussed Trex Company, Inc. (NYSE:TREX) in another article and shared Baron Real Estate Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 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.
