CrossingBridge Advisors, an investment management firm, published its third-quarter 2022 investor letter – a copy of which can be downloaded here. The fund continues to find “money-good” bonds and leveraged loans that have attractive yields with potential for additional upside if anticipated events come to pass. On the other hand, the fund is avoiding industries that continue to struggle due to the impact of COVID. Try to spare some time to check the fund’s top 5 holdings for you to have an idea about their best stock picks this 2022.
In its Q3 2022 investor letter, CrossingBridge Advisors mentioned G-III Apparel Group, Ltd. (NASDAQ:GIII) and explained its insights for the company. Founded in 1956, G-III Apparel Group, Ltd. (NASDAQ:GIII) is a New York, New York-based clothing company with a $618.7 million market capitalization. G-III Apparel Group, Ltd. (NASDAQ:GIII) delivered a -52.86% return since the beginning of the year, while its 12-month returns are down by -50.44%. The stock closed at $13.03 per share on December 12, 2022.
Here is what CrossingBridge Advisors has to say about G-III Apparel Group, Ltd. (NASDAQ:GIII) in its Q3 2022 investor letter:
“G-III Apparel is a global designer, manufacturer and distributor of branded apparel. Owned brands include DKNY and Karl Lagerfeld; licensed brands are headed by Calvin Klein and Tommy Hilfiger. While top line revenue and gross profit margins have largely returned to pre-pandemic levels, the company’s public valuation has traded down to historical lows (~4.4x P/E, 3.8x EV/EBITDA) ahead of recession worries. At these depressed valuations and given low leverage and steady free cash flow generation, we see G-III as a potential target for strategic or private equity acquisition.
In 3Q22, we began establishing a position in G-III’s 7.875% secured bond maturing in 2025, buying at price of 91 for a yield-to-maturity of 11.65%. With gross leverage of 1.3x EBITDA, we are confident in the credit and would be content to hold to maturity. In the event the company is acquired, however, the change of control put at 101% of par would likely accelerate repayment. Likewise, a sale of significant assets might lead to redemption of a portion of or all of the bonds at a price of 100. Thus, we view this investment as an attractive bond with a “call option” for a higher total return if there is an M&A event.”
Our calculations show that G-III Apparel Group, Ltd. (NASDAQ:GIII) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. G-III Apparel Group, Ltd. (NASDAQ:GIII) was in 18 hedge fund portfolios at the end of the second quarter of 2022, compared to 18 funds in the previous quarter. G-III Apparel Group, Ltd. (NASDAQ:GIII) delivered a -20.11% return in the past 3 months.
In (date of publication), we also shared another hedge fund’s views on G-III Apparel Group, Ltd. (NASDAQ:GIII) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q3 page.
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Disclosure: None. This article is originally published at Insider Monkey.
