Here’s Why White Brook Capital Invested in Itron, Inc. (ITRI)

Investment Management Company White Brook Capital published its second quarter investor letter, a copy of which can be downloaded here. The fund’s NAV decreased by -18.17% year-to-date, net of all realized and accrued fees. The fund’s portfolios are diversified across industries, and year to date, the top contributor was the materials sector. To see its best picks for 2022, check out the top 5 holdings of the fund.

In the Q2 2022 investor letter, White Brook Capital analyzed the market and provided future challenges and opportunities. Itron, Inc. (NASDAQ:ITRI) is the fund’s new addition in this quarter and the semiconductor shortage affected the operations of the company. Itron, Inc. (NASDAQ:ITRI) is a technology and service company headquartered in Liberty Lake, Washington, and has a market capitalization of $2.563 Billion. The stock of Itron, Inc. (NASDAQ:ITRI) closed at $55.41 per share on July 27, 2022. Itron, Inc. (NASDAQ:ITRI) had a return of 15.07% for the past month, whereas its 12-month returns plunged to 42.22%.

Here is what White Brook Capital specifically said about Itron, Inc. (NASDAQ:ITRI) in its Q2 2022 investor letter:

“During the quarter, the Fund re-entered an old position – Itron, Inc (NASDAQ:ITRI). This is the second time the Firm has owned the Company and the thesis is remarkably similar to the last time. The global semiconductor shortage has depressed the Company’s ability to install connected gas and electricity meters for utilities and layer on its value added services. Compared to last time we were invested, the Company’s business model is further along in its transition to a higher margin, more recurring cash flow business, with higher return on capital employed. The semiconductor shortage, however, has retarded its ability to install meteres in recent quarters. The Company continues to build a solid backlog and hasn’t lost a single customer – a testament to the value it provides to its customers.

From a capital allocation standpoint, the CFO proved her value during the stock’s run, replacing the company’s debt with a 0% convertible that converts at 3x the current stock price. As the stock price has fallen, the Board has approved a stock repurchase plan and the company has been aggressively repurchasing at this level.

With its customers relatively recession proof and the business likely to execute better in a slower growth economic environment as semiconductor demands of other industries lessen, I expect our returns to be solid.”

Pixabay/Public Domain

Our research shows that Itron, Inc. (NASDAQ:ITRI) is not on the list of our 30 Most Popular Stocks Among Hedge Funds. Itron, Inc. (NASDAQ:ITRI) was in 22 hedge fund portfolios at the end of the first quarter 2022, compared to 18 in the previous quarter. Itron, Inc. (NASDAQ:ITRI) shares lost 38.65% of their value over the last 52 weeks.

In May we published an article Itron, Inc. (NASDAQ:ITRI) and shared ClearBridge Investments’ views on the company. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.

Disclosure: None. This article is originally published at Insider Monkey.