Long Cast Advisers, an investment management firm, released its third quarter 2023 investor letter, a copy of which can be downloaded here. In the third quarter of 2023, ending September 30, cumulative net returns stood at 8%. Year-to-date returns up to the quarter’s conclusion reached 20%. Since its inception in November 2015 through the end of the third quarter in 2023, LCA has delivered a cumulative net return of 190%, equivalent to a 14% compound annual growth rate (CAGR) after accounting for fees. Take a moment to review the fund’s top 5 holdings to gain insights into their primary investment choices for 2023.
In its Q3 2023 investor letter, Long Cast Advisers mentioned Pro-Dex, Inc. (NASDAQ:PDEX) and explained its insights for the company. Pro-Dex, Inc. (NASDAQ:PDEX) is an Irvine, California-based surgical and medical instrument manufacturing company with a $63.3 million market capitalization. Pro-Dex, Inc. (NASDAQ:PDEX) delivered a 63.3% return since the beginning of the year, while its 12-month returns are up by 7.47%. The stock closed at $17.85 per share on November 9, 2023.
Here is what Long Cast Advisers has to say about Pro-Dex, Inc. (NASDAQ:PDEX) in its Q3 2023 investor letter:
“Pro-Dex, Inc. (NASDAQ:PDEX) is a small contract manufacturer in the medical device space. The core product is a battery powered handheld driver used by surgeons to screw implants or plates into bone (think knees, spines, facial reconstruction, et al) with a precise amount of torque to avoid stripping. The company has its own engineering team to develop its own products and works with branded device manufacturers to develop theirs (I believe Stryker is the largest single client).
I don’t normally think of contract manufacturing as a wonderful industry but there are few aspects about this company that make it an unusual, compelling and attractive long-term investment. I elaborate on three of these attributes below.
The Board: Chairman Nick Swenson and Board member Ray Cabillot together own about 40% of the company. They are thoughtful investors who run their own hedge funds (AO Partners and Farnam Street Partners, respectively) and they manage the capital allocation strategy at PDEX. The evidence observed in the growth in book value per share, which I believe have their “fingerprints” suggests a focus on value creation.
New manufacturing facility: The company doubled the size of its manufacturing space by acquiring a new facility four miles from the existing headquarters in Irvine, CA. The build out and validation of the space took much longer than expected, partially impacted by COVID, and partially because this is a tiny company that doesn’t have a lot of experience doubling the size of its manufacturing space. The expansion is now complete. Obviously, the space doesn’t promise additional revenues but it doubles the size of the opportunity.
Backlog: Along with doubling the size of its manufacturing footprint, the company doubled the size of its backlog to $41M through a large order from a leading customer. The inference is that FY24 could be a high growth year.”
A medical practitioner examining a 3D-printed model of a patient’s anatomy, made possible with Materialise Manufacturing services.
Our calculations show that Pro-Dex, Inc. (NASDAQ:PDEX) does not belong on our list of the 30 Most Popular Stocks Among Hedge Funds. Pro-Dex, Inc. (NASDAQ:PDEX) was in 1 hedge fund portfolio at the end of the second quarter of 2023, compared to 1 fund in the previous quarter. Pro-Dex, Inc. (NASDAQ:PDEX) delivered a 9.82% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q3 2023 page.
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Disclosure: None. This article is originally published at Insider Monkey.
