Alger, an investment management firm, published its “Alger Small Cap Focus Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. During the fourth quarter, the largest portfolio sector weightings were Health Care and Information Technology. The largest sector overweight was Health Care. The portfolio had no exposure to the Financials, Materials, Real Estate, or Utilities sectors. Class A shares of the Alger Small Cap Focus Fund underperformed the Russell 2000 Growth Index during the fourth quarter of 2021. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Alger Small Cap Focus Fund, in its Q4 2021 investor letter, mentioned Trex Company, Inc. (NYSE: TREX) and discussed its stance on the firm. Trex Company, Inc. is a Winchester, Virginia-based manufacturing company with a $9.8 billion market capitalization. TREX delivered a -36.84% return since the beginning of the year, while its 12-month returns are down by -19.75%. The stock closed at $85.29 per share on February 11, 2022.
Here is what Alger Small Cap Focus Fund has to say about Trex Company, Inc. in its Q4 2021 investor letter:
“Trex Company is a dominant manufacturer of composite decking and railing for residential applications, with leading market share in the U.S. In addition, Trex offers related products including fencing, steel deck framing and outdoor lighting. Trex also has a commercial business that provides custom-engineered railing and staging systems for commercial and multi-family housing markets. Trex is exposed to the secular trends of outdoor living and environmental sustainability that favors using recycled composite materials for residential decking. Composite materials currently represent only 20% of decking material by volume, which we believe provides opportunity for the company to generate growth that exceeds that of the overall residential remodel industry. We believe Trex has the strongest brand within composite decking. It also has a wide distribution network and an industry-leading margin profile underpinned by a proprietary manufacturing process that uses 95% recycled material, creating a sustainable competitive moat.
Trex shares outperformed after the company delivered very strong third quarter results and provided fourth quarter revenue guidance that was above consensus, which disproved a recent bearish narrative around slowing demand. In addition, Trex is positioned to benefit from recently implemented price increases. Those factors led management to express confidence in “strong double digit” revenue growth for 2022. Trex also announced plans to add a third residential manufacturing facility in Little Rock, Arkansas, to substantially expand capacity. The facility will drive unmatched geographic coverage and provide Trex with the ability to serve all regions as well as fulfil international demand.”
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Our calculations show that Trex Company, Inc. (NYSE: TREX) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. TREX was in 21 hedge fund portfolios at the end of the third quarter of 2021, compared to 25 funds in the previous quarter. Trex Company, Inc. (NYSE: TREX) delivered a -34.28% return in the past 3 months.
In June 2021, we also shared another hedge fund’s views on TREX 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.
