Arquitos Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. An annual portfolio net return of 54.9% was recorded by the fund for the whole year of 2021, versus the S&P 500 Index which delivered a 28.7% return for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Arquitos Capital Management, in its Q4 2021 investor letter, mentioned Nam Tai Property Inc. (NYSE: NTP) and discussed its stance on the firm. Nam Tai Property Inc. is a China-based property development and management company with a $326.6 million market capitalization. NTP delivered a -17.54% return since the beginning of the year, while its 12-month returns are down by -11.49%. The stock closed at $8.32 per share on February 19, 2022.
Here is what Arquitos Capital Management has to say about Nam Tai Property Inc. in its Q4 2021 investor letter:
“Nam Tai Property (NTP) was a major contributor in the first quarter as our thesis played out. We realized gains on the equity of nearly 200% and even more on our options positions. I wrote about the Nam Tai position in the first-quarter letter. I prematurely sold out of our position completely. As fate would have it, the activists involved were successful from a legal sense, in that they took control of the board of directors, but they have been unsuccessful thus far from a practical sense. This has perhaps created another opportunity.
Nam Tai is a registered company in the British Virgin Islands and trades on the New York Stock Exchange. It was through those legal structures that the U.S.-based activists took legal control of the company. However, Nam Tai’s operations are in mainland China. Though the activists have full control of the board of directors and have appointed new executives, they have been unable to gain full control of the company’s operations. Due to this, shares have fallen back down to the $8 to $9 range.
There are obvious risks here, but there is also a multi-bagger opportunity. The new CEO is a long-time senior employee of the company and is well-connected to the local and national governments. The activists appear willing to do anything to support the company, including buying additional shares and extending lines of credit. And the majority of the company’s assets are in the real estate they own and are developing, as opposed to cash and investments.
The activists will gain full control of the company at some point, and the value of the company’s net assets are significantly greater than the current market cap. For these reasons and others, I have reinitiated a position in the stock.”
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Our calculations show that Nam Tai Property Inc. (NYSE: NTP) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. NTP was in 8 hedge fund portfolios at the end of the third quarter of 2021, compared to 3 funds in the previous quarter. Nam Tai Property Inc. (NYSE: NTP) delivered a -67.53% return in the past 3 months.
In January 2022, we also shared another hedge fund’s views on NTP in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
