Voss Capital, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be seen here. In its Q1 2022 letter, Voss Capital mentioned that as of the middle of May, using its Base Case price targets, which are calculated using a detailed analysis of the fundamentals of our portfolio companies, the fund estimates that the upside to its long book exceeds 100% in the next 12-18 months, which compares very favorably to Voss’ historical average estimate of closer to 30%. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Voss Capital mentioned Williams-Sonoma, Inc. (NYSE:WSM) and explained its insights for the company. Founded in 1956, Williams-Sonoma, Inc. (NYSE:WSM) is a San Francisco, California-based retail company with an $8.8 billion market capitalization. Williams-Sonoma, Inc. (NYSE:WSM) delivered a -24.37% return since the beginning of the year, while its 12-month returns are down by -26.22%. The stock closed at $127.92 per share on May 31, 2022.
Here is what Voss Capital has to say about Williams-Sonoma, Inc. (NYSE:WSM) in its Q1 2022 investor letter:
“We believe shorting furniture retailers has arguably become a consensus view on the back of widely known tough comps from early 2021 (+26% and +40% SSS Comps for WSM in calendar Q1/Q2 ‘21) and fear of pull forward of demand, which seems to be corroborated by weak credit card data in the category the last few weeks and a poor outlook from furniture e-Commerce giant Wayfair, not to mention a panic-inducing, rambling conference call from the oft colorful CEO of Restoration Hardware. Lazy thematic macro analysis that stops there, however, paints an incomplete picture of what has transpired at many individual companies like WSM that have been deemed COVID beneficiaries that are now at all-time low valuations.
WSM is a furniture and home décor retailer that owns several well-known brands: William Sonoma, Pottery Barn, Rejuvenation, Mark & Graham, and most importantly, west elm. While perhaps thought of as a dying mall-based brick & mortar retailer, WSM derives the vast majority (66%+) of its revenue from e-Commerce and has been a remarkably steady performer, remaining free cash flow positive every year since at least 2007 and achieving positive same store sales comps since 2010, including +17% in 2020, +22% in 2021 with guidance for a further mid-to-high single digit growth again this year. Within the overall positive sales trends, west elm’s consistent growth has been even more impressive, with a 16% average annual same-store sales growth rate since 2012. To little fanfare, by our calculation, WSM has become the single highest quality retailer in public markets with a 58% return on invested capital (ROIC) in 2021 and a 39% ROIC on average over the past 3 years…” (Click here to see the full text)
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Our calculations show that Williams-Sonoma, Inc. (NYSE:WSM) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Williams-Sonoma, Inc. (NYSE:WSM) was in # hedge fund portfolios at the end of the first quarter of 2022, compared to # funds in the previous quarter. Williams-Sonoma, Inc. (NYSE:WSM) delivered a 3Month% return in the past 3 months.
Last month, we also shared another hedge fund’s views on Williams-Sonoma, Inc. (NYSE:WSM) in another article. 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.
