Miller Value Partners, an investment management firm, published its “Miller Income Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly return of 10.21% was recorded by Miller Income Fund’s I-shares for the Q2 of 2021, beating its benchmark, the ICE BofA US High Yield Index, which had a 2.77% gain for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Miller Value Partners, the fund mentioned The Chemours Company (NYSE: CC) and discussed its stance on the firm. The Chemours Company is a Wilmington, Delaware-based chemicals company with a $4.5 billion market capitalization. CC delivered an 11.34% return since the beginning of the year, while its 12-month returns are up by 40.03%. The stock closed at $27.01 per share on September 21, 2021.
Here is what Miller Value Partners has to say about The Chemours Company in its Q2 2021 investor letter:
“The Chemours Co (CC) rose 25.6% during the quarter. The company reported Q1 revenue of $1.436Bn, beating consensus of $1.413Bn and rising +10% Y/Y driven by positive volume contributions across all segments. Earnings Before Income Taxes Depreciation and Amortization (EBITDA) of $268M topped estimates of $265M and rose +4% Y/Y despite a $9M headwind tied to Winter Storm Uri. Better than expected results drove a Free Cash Flow (FCF) improvement of $41M Y/Y to -$21M and cash balance of $1.0Bn. Management raised Fiscal Year 2021 (FY21) guidance, including EBITDA of $1.1Bn-$1.25Bn (from $1.0Bn-$1.15Bn), Earnings Per Share (EPS) of $2.84-$3.56 (from $2.40-$3.12), and FCF greater than $450M (from >$350M). Additionally, peer Orica and private equity firms Littlejohn and One Rock are said to be among groups that submitted bids for the company’s Mining Solutions business. Binding bids are likely to come as soon as this month and are said to value the unit at over $600M (11% of the current market cap and 7% of FY20 revenue and EBITDA). Lastly, Chemours announced a CEO transition with Mark Vergnano moving to non-executive Chairman of the Board and COO Mark Newman becoming CEO effective July 1st. Mr. Newman has been with Chemours since the 2015 split from DuPont (DD), serving as CFO for four years before moving to the COO role in 2019.”
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Based on our calculations, The Chemours Company (NYSE: CC) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. CC was in 24 hedge fund portfolios at the end of the first half of 2021, compared to 27 funds in the previous quarter. The Chemours Company (NYSE: CC) delivered a -19.67% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
