Cooper Investors, an investment management firm, published its “Cooper Investors Global Equities Fund (Hedged)” fourth quarter 2021 investor letter – a copy of which can be downloaded here. For the 3 months and 12 months to December 31st, the Fund returned +6.0% and +23.6% respectively. This compares to the benchmark which returned +6.6% and +20.2%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Cooper Investors, in its Q4 2021 investor letter, mentioned Terminix Global Holdings, Inc. (NYSE: TMX) and discussed its stance on the firm. Terminix Global Holdings, Inc. is a Memphis, Tennessee-based residential and commercial termite and pest management services provider with a $5.1 billion market capitalization. TMX delivered a -5.53% return since the beginning of the year, while its 12-month returns are down by -17.91%. The stock closed at $42.73 per share on January 14, 2022.
Here is what Cooper Investors has to say about Terminix Global Holdings, Inc. in its Q4 2021 investor letter:
“In mid-December portfolio holding Rentokil Initial announced its intention to acquire US-listed Terminix Global Holdings for around US$6bn. As a reminder Rentokil is the world’s largest Pest Control business, providing annual contract-based prevention and extermination services to residential, commercial andgovernment customers in over 80 countries across the globe.
Terminix is the largest provider of home termite services in the US and a top three player in residential and commercial pest. This deal will roughly double the size of Rentokil’s Pest Control business in North America and take them to number one in terms of market share. While we are typically wary of large acquisitions that attract the label of ‘transformational’ we feel positive about this transaction for several reasons.
Firstly, route density economics. Pest Control is a ‘route density’ business – a technician with a truck services a number of sites on a route in the vicinity of their branch on a recurring basis. The more sites the technician can visit to check traps, lay down bait stations, fumigate basements and remove infestations, the higher sales, margins and returns are for that particular branch since higher revenues are earned over the same fixed cost base. So, acquisitions have long been part of the Pest Control landscape since it is highly accretive for bigger firms to acquire smaller independents and plug them into their routes. Margin expansion from ‘fill-ins’ which materially increase local density and market share can be significant, adding up to 5-10 points of margin in a single region. In acquiring the ~375 branches of Terminix in one fell swoop, Rentokil has a big opportunity to extract branch and route synergies…” (Click here to see the full text)
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Our calculations show that Terminix Global Holdings, Inc. (NYSE: TMX) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. TMX was in 20 hedge fund portfolios at the end of the third quarter of 2021, compared to 22 funds in the previous quarter. Terminix Global Holdings, Inc. (NYSE: TMX) delivered a 6.03% 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.
