Laughing Water Capital, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. For the fourth quarter of 2021, an investment in Class A shares of Laughing Water Capital (“LWC”) returned less than 1% vs 11.0% and 2.1% for the SP500TR and R2000 respectively. For the full year, LWC returned approximately 39%, vs. 28.7% and 14.8% for the SP500TR and R2000 respectively. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Laughing Water Capital, in its Q4 2021 investor letter, mentioned TransAct Technologies Incorporated (NASDAQ: TACT) and discussed its stance on the firm. TransAct Technologies Incorporated is a Hamden, Connecticut-based software company with a $93.7 million market capitalization. TACT delivered a -12.57% return since the beginning of the year, while its 12-month returns are down by -1.24%. The stock closed at $9.53 per share on February 19, 2022.
Here is what Laughing Water Capital has to say about TransAct Technologies Incorporated in its Q4 2021 investor letter:
“Transact (TACT) – Transact, our niche printer company that also houses a fast growing C-store/restaurant back of house SAAS product (BOHA!), was first introduced as Company #1 in our Q1’2021 letter. The company has been executing well, but shares plummeted in the 2nd half of 2021. I believe the sell-off was related to three factors, all of which are temporary. First, management has indicated that due to supply chain problems, they have had trouble securing inventory, and installs have been further slowed by customers’ inability to find labor. This is of course frustrating, but will take care of itself with time. Second, as Covid cases began to spike when the weather turned cold, management filed a shelf offering, which the market took as a sign that the company would be raising dilutive equity capital. I believe the shelf was filed for emergency use only, because if the world re-entered Covid lockdowns, the company could run into liquidity problems. As it has become clear that there is enormous hesitancy around renewed wide scale lockdowns, I think the risk of an additional capital raise hassubsided. Lastly, as shares declined ~40% from earlier highs, the stock became an attractive tax loss sale candidate.
Looking forward, with gentle prodding from 3 activist investors I think it is likely that the company begins to explore a sale of its cash-cow slot machine printer business in the coming year. I believe that this sale could generate proceeds that would cover most of the company’s market cap. This cash would then be used to continue to fuel the 100+% growth of BOHA!, which could ultimately be worth multiples of Transact’s current enterprise value.”
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Our calculations show that TransAct Technologies Incorporated (NASDAQ: TACT) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. TACT was in 9 hedge fund portfolios at the end of the third quarter of 2021, compared to 8 funds in the previous quarter. TransAct Technologies Incorporated (NASDAQ: TACT) delivered a -14.91% return in the past 3 months.
In July 2021, we also shared another hedge fund’s views on TACT 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.
