Is IronSource (IS) a Smart Long-Term Buy?

Argosy Investors, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. The fund’s 2022 first-quarter performance was -15.1% in select accounts. The S&P 500 by comparison returned -4.4%. Argosy ended the quarter with 43% of the portfolio in cash and equivalents, which means that these results would have been worse without the allocation to cash. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, Argosy Investors mentioned ironSource Ltd. (NYSE:IS) and explained its insights for the company. Founded in 2010, ironSource Ltd. (NYSE:IS) is a Tel Aviv-Yafo, Israel-based global software company with a $2.3 billion market capitalization. ironSource Ltd. (NYSE:IS) delivered a -70.80% return since the beginning of the year, while its 12-month returns are down by -77.33%. The stock closed at $2.26 per share on June 20, 2022.

Here is what Argosy Investors has to say about ironSource Ltd. (NYSE:IS) in its Q1 2022 investor letter:

“I purchased IronSource early in the quarter and have seen IS decline in value nearly 32% through the end of the quarter, and further after the quarter. IronSource is a platform that helps game publishers maximize the financial success of their games and earns a cut of the revenues generated using its technology. They have grown extremely quickly in recent years, as gaming has become an increasingly popular outlet for free time. They grew 46% last quarter to over $150 million in quarterly revenue, at an operating margin of 18%. They expect to generate $800 million in revenue this year, and likely $0.15 per share of free cash flow in 2022, with the potential for $0.25 a few years from now. I believe that IS has a very profitable business model with the potential for a long runway of growth. At the same time, I could have chosen a better purchase price to make the investment, and that has become clear quite quickly. At current prices below $4 per share, returns from here can be attractive over the course of a few years.”

Our calculations show that ironSource Ltd. (NYSE:IS) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. ironSource Ltd. (NYSE:IS) was in 36 hedge fund portfolios at the end of the first quarter of 2022, compared to 24 funds in the previous quarter. ironSource Ltd. (NYSE:IS) delivered a -57.52% return in the past 3 months.

In April 2022, we also shared another hedge fund’s views on ironSource Ltd. (NYSE:IS) in 10 Best Stocks to Buy Now According to Billionaire Nicholas Pritzker’s Tao Capital. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

Disclosure: None. This article is originally published at Insider Monkey.