Greystone Capital Management, an investment management company, released its second-quarter 2023 investor letter. A copy of the same can be downloaded here. In the second quarter, the return for separate accounts managed by the firm ranged from -0.7% to +8.0% and the median account returned +2.6% net of fees. Year-to-date, the Median account returned +6.4%, net of fees. In comparison to S&P 500’s and Russell 2000’s quarterly returns of +8.7% and +5.2% and year-to-date returns of +16.9% and +8.1%, respectively. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Greystone Capital Management highlighted stocks like APi Group Corporation (NYSE:APG) in the second quarter 2023 investor letter. Headquartered in New Brighton, Minnesota, APi Group Corporation (NYSE:APG) is a safety, specialty, and industrial services provider. On September 20, 2023, APi Group Corporation (NYSE:APG) stock closed at $26.20 per share. One-month return of APi Group Corporation (NYSE:APG) was -3.85%, and its shares gained 82.20% of their value over the last 52 weeks. APi Group Corporation (NYSE:APG) has a market capitalization of $6.178 billion.
Greystone Capital Management made the following comment about APi Group Corporation (NYSE:APG) in its Q2 2023 investor letter:
“APi Group Corporation (NYSE:APG) is the largest business we own, by far. The company has over ten analysts and is included in various indices. A large value shop, along with Vanguard and Blackrock own 30% of shares outstanding. Not quite off the beaten path. Yet I believe there are a number of dynamics including the management team, various business segments and APG’s route to going public that have served as an overhang to the business quality, where aspects of the company’s competitive strengths and growth runway remain unappreciated.
I would call APG our fire safety business, which has been around for a long time. In fact, there are not many 75-year-old businesses. There are not many businesses whose services are considered a requirement (statutorily mandated) for their end customers. There are not many businesses whose leadership, during a transition period, hand-picked the buying party in order to preserve the company’s culture and employee base. There are not many businesses whose Chairman has a positive decades long track record of capital allocation and operating expertise. If you find a business that contains the above elements, it usually can’t be purchased for a fair price.
APG fits the above description (surprise) and I believe there remains significant upside as the market comes to better understand the strength of the business, the company continues to integrate a large – and very accretive – acquisition from 2021, and as they continue to pay down debt. APG will also perform well during any adverse economic periods as they have in the past, and since the business is mistakenly viewed as levered to new construction, I think strong performance over time will shine through.
APG went public via SPAC, has few pure public comps, and has some non-believers when it comes to management. Separating the company’s Specialty Services business from Safety Services (Fire Safety) would go a long way toward simplifying the story (although in my view it’s quite simple). Outside of that, with continued execution, the market will start to recognize both the strength and attractiveness of APG’s business, as well as the potential for increased cash flow generation moving forward. If management is to be taken seriously about their cash flow guidance, APG is trading for less than 10x EBITDA looking out a few years. I like our chances to do well owning this business over time.”
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APi Group Corporation (NYSE:APG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held APi Group Corporation (NYSE:APG) at the end of second quarter which was 41 in the previous quarter.
We discussed APi Group Corporation (NYSE:APG) in another article and shared Ave Maria Focused Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
