Upslope Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of +3.4% was recorded by the fund for the fourth quarter of 2021, compared to the S&P Midcap 400 ETF and the HFRX Equity Hedge Index that delivered +8.0% and +2.7% gains for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Upslope Capital Management, in its Q4 2021 investor letter, mentioned Casey’s General Stores, Inc. (NASDAQ: CASY) and discussed its stance on the firm. Casey’s General Stores, Inc. is an Ankeny, Iowa-based convenience store company with a $6.8 billion market capitalization. CASY delivered a -5.86% return since the beginning of the year, while its 12-month returns are down by -4.24%. The stock closed at $185.79 per share on February 4, 2022.
Here is what Upslope Capital Management has to say about Casey’s General Stores, Inc. in its Q4 2021 investor letter:
“Casey’s General Store (CASY) – New Long
Casey’s is the 3rd largest operator of convenience stores in the United States and effectively the 5th largest pizza chain in the country. Geographically, Casey’s is focused exclusively on the Midwest and South, with locations primarily in small towns (almost half with populations <5,000; three-quarters with <20,000). Gross profit is split across Grocery & General Merchandise (37%), Fuel (32%) and Prepared Food & Dispensed Beverage (28%).
Generally, Upslope’s thesis is that Casey’s is an attractive, defensive, and growing value-oriented stock – perfect for the environment today (and years ahead), which for some time has been enamored with sexy, speculative growth stories. The company has a unique and concentrated geographic footprint (see above), which could eventually make it an M&A target. At <11x EBITDA the stock is not expensive on either a relative or absolute basis and the balance sheet is reasonable (<2x net leverage).
CASY’s competitive advantages are obvious and reflected in its financials. The primary competitive advantage Casey has versus competitors is its massively larger scale, as many competitors are effectively “mom & pop” convenience stores. Casey’s also benefits from the diversity of its model. This has come in to focus of late as retailers everywhere have faced rising inflationary headwinds. Casey’s has been able to offset a significant portion of cost increases with expanded fuel margins (on the flipside, CASY has the ability to flex margins down to drive traffic in-store). This flexibility, combined with its scale advantages enable Casey’s to offer better value to customers, while still operating profitably…”(Click here to see the full text)
Our calculations show that Casey’s General Stores, Inc. (NASDAQ: CASY) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. CASY was in 22 hedge fund portfolios at the end of the third quarter of 2021, compared to 24 funds in the previous quarter. Casey’s General Stores, Inc. (NASDAQ: CASY) delivered a -7.80% return in the past 3 months.
In May 2021, we also shared another hedge fund’s views on CASY 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.
