Davis Funds, an investment management firm, published its “Davis Global Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. After outperforming for the previous five-, 10- and 15-year periods, Davis Global Fund underperformed in 2021. As a result, the earnings of Davis Global Fund portfolio companies have grown at 23.2% compared to the index at 16.8%, yet are selling at a significant discount, 9.1x vs. 18.9x. For the year 2021, Davis Global Fund returned −5.09%, compared with an 18.54% return for the MSCI ACWI (All Country World Index), an underperformance of 23.63%. Entering the year, Davis Global Fund had generated solid outperformance relative to the MSCI ACWI (All Country World Index) over five-, 10- and 15-year periods. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Davis Global Fund, in its Q4 2021 investor letter, mentioned Darling Ingredients Inc. (NYSE:DAR) and discussed its stance on the firm. Founded in 1882, Darling Ingredients Inc. (NYSE:DAR) is an Irving, Texas-based animal food manufacturing company with a $12.0 billion market capitalization, and is currently spearheaded by its CEO, Randall C Stuewe. Darling Ingredients Inc. (NYSE:DAR) delivered a 6.65% return since the beginning of the year, while its 12-month returns are down by -2.44%. The stock closed at $73.90 per share on March 16, 2022.
Here is what Davis Global Fund has to say about Darling Ingredients Inc. (NYSE:DAR) in its Q4 2021 investor letter:
“Davis Global Fund added several new positions over the past year, including the industrial company Darling Ingredients. Darling Ingredients is the largest global processor of animal parts, repurposing fats and proteins sourced from slaughterhouses, grocers and restaurant chains into higher and better uses, including pet/livestock feed, fertilizer, soap, gelatin, collagen, and increasingly fuel. Through a 50/50 joint venture (JV) with Valero, Darling is the largest U.S. producer of renewable diesel, using its advantaged access to low-carbon feedstocks (primarily animal fats and waste oils) to produce fuel that is 70–80% less carbon-intensive than fossil-fuel-derived diesel. This fuel can be sold at a premium, due to the increasing demand and incentives from buyers and jurisdictions looking to decarbonize their fuel supply. The production of renewable diesel is forecast to grow fourfold by 2024, which should result in meaningful earnings growth in coming years. Darling is an out-of-thespotlight business that trades for only 10x owner earnings, a significant discount to its peers.”
Our calculations show that Darling Ingredients Inc. (NYSE:DAR) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. Darling Ingredients Inc. (NYSE:DAR) was in 29 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 33 funds in the previous quarter. Darling Ingredients Inc. (NYSE:DAR) delivered a 17.53% return in the past 3 months.
In November 2021, we published an article that includes Darling Ingredients Inc. (NYSE:DAR) in the Top 5 Stock Picks of Naval Khera’s Brightline Capital. You can find more than 100 investor 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.
