Sound Shore Management, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. The Sound Shore Fund Investor Class (SSHFX) and Institutional Class (SSHVX) declined 0.97% and 0.91%, respectively, in the first quarter of 2022, trailing the Russell 1000 Value Index (Russell Value) which declined 0.74%. The one-year advances for SSHFX of 10.07% and for SSHVX of 10.30% were behind the Russell Value’s 11.67%. As long-term investors, we highlight that Sound Shore’s 30-year annualized returns of 10.19% and 10.45%, for SSHFX and SSHVX, respectively, as of March 31, 2022, the fund is ahead of the Russell Value at 10.17%. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Sound Shore Fund mentioned Baker Hughes Company (NASDAQ:BKR) and explained its insights for the company. Founded in 1987, Baker Hughes Company (NASDAQ:BKR) is a Houston, Texas-based oil industry company with a $33.9 billion market capitalization. Baker Hughes Company (NASDAQ:BKR) delivered a 30.30% return since the beginning of the year, while its 12-month returns are up by 54.81%. The stock closed at $31.60 per share on April 26, 2022.
Here is what Sound Shore Fund has to say about Baker Hughes Company (NASDAQ:BKR) in its Q1 2022 investor letter:
“Energy was the best performing sector which was reflected in our top contributors. Energy technology provider Baker Hughes finished higher, driven by stronger than expected order growth in its liquid natural gas (LNG) turbo-machinery segment and increasing global rig count. Both companies have strong balance sheets with little debt and are returning capital via dividends and stock repurchases. Soaring energy prices and Europe’s unfortunate reliance on Russian supply reinforced our belief that low cost natural gas is both a strategic and economic advantage for the United States. Over the last several years, the pandemic, supply disruptions and lack of investment, along with extreme weather conditions had already driven prices higher. Still, natural gas is expected to play a critical role in the transition to renewable energy sources and these two investments benefit from the increased demand.
Baker is the dominant player in LNG projects and its growing backlog is a positive indicator of how this business may drive future earnings. They are also a leader in carbon capture technology and the development of hydrogen as a clean, alternative fuel source. Carbon capture technology is considered critical to delivering CO2 reductions needed to meet global climate and net-zero emissions targets. Applicable to both the energy and industrial sectors, carbon capture is among the most promising de-carbonization solutions for both existing facilities and new greenfield projects. We were able to purchase the stock at a below normal valuation and an attractive 8% free cash flow yield and we remain positive on its future prospects.”
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Our calculations show that Baker Hughes Company (NASDAQ:BKR) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Baker Hughes Company (NASDAQ:BKR) was in 35 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 37 funds in the previous quarter. Baker Hughes Company (NASDAQ:BKR) delivered a 13.92% return in the past 3 months.
In October 2021, we also shared another hedge fund’s views on Baker Hughes Company (NASDAQ:BKR) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
