Horos Asset Management, an investment management company, recently released its second quarter 2022 investor letter. A copy of the same can be downloaded here. Since its inception, in May 2018, Horos Value Internacional has returned 19.8% and Horos Value Iberia has returned 7.1%. For more information on the fund’s top picks in 2022, please check its top five holdings.
Horos Asset Management discussed stocks like Mistras Group, Inc. (NYSE:MG) in its Q2 2022 investor letter. Mistras Group, Inc. (NYSE:MG) is a technology-enabled asset solution provider headquartered in Princeton Junction, New Jersey, and has a market capitalization of $171.39 Million. The stock of Mistras Group, Inc. (NYSE:MG) closed at $5.75 per share on August 19, 2022. One-month return of Mistras Group, Inc. (NYSE:MG) was -7.41% and its shares lost 40.66% of their value over the last 52 weeks.
Here is what Horos Asset Management specifically said about Mistras Group, Inc. (NYSE:MG):
“One of the new names we added in this sector during the quarter was Mistras Group, Inc. (NYSE:MG). The U.S. company offers asset protection solutions through non-destructive testing, as well as engineering services or machinery access and maintenance. It is, therefore, a company with products and services similar to those of this business unit of Spain’s Applus Services. Two factors explain why an investment opportunity has arisen in Mistras Group. On the one hand, the company ostensibly increased its debt in 2017 and 2018 to finance major acquisitions in the oil and gas and aerospace sectors. The crisis that both sectors experienced, later aggravated by the impact of the coronavirus pandemic, put Mistras Group in a fragile financial situation. However, the timely renegotiation with the banks in 2020, as well as the gradual recovery of its business, seems to have taken any financial risk out of the equation (the company should end 2022 with a debt ratio of less than 3x EBITDA). On the other hand, Mistras Group has an exposure of c. 60% of its revenues to the oil and gas sector, so we would be investing at a time when this segment should start to show a significant recovery in its profitability and cash generation. All in all, we believe that Mistras Group should be able to generate 30 million dollars per year, which would allow it to trade at around 8x its free cash flow in three years. This is certainly a very attractive valuation for a business that should be able to generate returns on capital employed of around 15% in a more normalized position in the cycle.”
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Although Horos Asset Management invested in Mistras Group, Inc. (NYSE:MG), it is in not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held Mistras Group, Inc. (NYSE:MG) at the end of the first quarter which was 13 in the previous quarter.
We discussed Mistras Group, Inc. (NYSE:MG) in another article and shared a list of stocks to buy as per Steve Pei’s Gratia Capital. 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.
