Is Energy Recovery (ERII) A Smart Long-Term Buy?

Diamond Hill Capital, an investment management firm, published its “Diamond Hill Small Cap Fund” fourth-quarter 2021 investor letter – a copy of which can be downloaded here. The portfolio outpaced the Russell 2000® Index in the quarter, adding to full-year outperformance. Relative performance was aided by our below-benchmark health care exposure, particularly its lack of exposure to biotechnology stocks which were down nearly 13% in the quarter and represent almost half the sector’s weight Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Diamond Hill Small Cap Fund, in its Q4 2021 investor letter, mentioned Energy Recovery, Inc. (NASDAQ: ERII) and discussed its stance on the firm. Energy Recovery, Inc. is a San Leandro, California-based chemical manufacturing company with a $1.0 billion market capitalization. ERII delivered a -10.52% return since the beginning of the year, while its 12-month returns are up by 9.26%. The stock closed at $19.23 per share on February 25, 2022.

Here is what Diamond Hill Small Cap Fund has to say about Energy Recovery, Inc. in its Q4 2021 investor letter:

“Energy Recovery (ERII) makes the world’s most efficient industrial pressure exchangers with a difficult-to-replicate technological advantage. ERII commands dominant market share in the desalination end-market, which could see meaningful secular growth over the next several decades. Further, we believe ERII is close to commercializing its pressure exchanger technology, which could allow economic substitution of carbon dioxide for high global warming potential refrigerants, thereby substantially increasing the company’s addressable market.”

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Our calculations show that Energy Recovery, Inc. (NASDAQ: ERII) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. ERII was in 15 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 16 funds in the previous quarter. Energy Recovery, Inc. (NASDAQ: ERII) delivered a -12.27% return in the past 3 months. 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.