Alta Fox Capital, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. In Q4 2021, the Alta Fox Opportunities Fund (“the Fund”) produced a gross return of 3.82% and a net return of 3.04%. The Fund’s average net exposure during the quarter was 76.48%. Since its inception in April 2018, the Fund has produced a gross return of 649.50% and a net return of 434.83% compared to the S&P 500’s return of 93.06%, the Russell 2000’s return of 53.98%, and the Russell Microcap’s return of 52.58%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Alta Fox Capital, in its Q4 2021 investor letter, mentioned IDT Corporation (NYSE: IDT) and discussed its stance on the firm. Founded in 1990, IDT Corporation is a Newark, New Jersey-based fintech provider with an $885.1 million market capitalization, and is currently spearheaded by its CEO, Samuel Jonas. IDT delivered a -22.51% return since the beginning of the year, while its 12-month returns are up by 61.95%. The stock closed at $34.22 per share on March 08, 2022.
Here is what Alta Fox Capital has to say about IDT Corporation in its Q4 2021 investor letter:
“We believe the recent sell-off in IDT is a good example of the market violently selling off misunderstood assets without much validity. At the time of this writing, IDT’s share price has declined from a peak of more than $65.00 in November to approximately $35.00. This sell-off strikes us as an irrational move based on panic selling and illiquidity rather than changing fundamentals. As a conglomerate with many distinct businesses, IDT is neither easy to understand nor easy to value. The lack of any sell-side coverage does not help, nor does some SAAS-valuation exposure in some of their business segments. Large insider ownership reduces the freely traded float. However, instead of rehashing the full IDT thesis, one can simply look at their most valuable business: NRS.
In the most recent quarter, NRS grew revenue 105% over the prior year. This was triple-digit growth on top of triple-digit growth in the prior year (2-year comp was 321%). That is incredible organic top-line growth. Unlike many other SAAS businesses, NRS is already EBITDA breakeven (achieved in the most recent reported quarter). Therefore, we are dealing with a “Rule of 40” in excess of 100. NRS is a 90%+ gross margin business dominating a niche with no meaningful competition, growing triple digits, and already scaling profitability. Moreover, IDT at the parent-company level has a strong balance sheet with more than $100M in cash, is generating significant EBITDA across its other business segments, and is managed by an A+ management team with a proven track record of value creation. We continue to believe that shares of IDT are likely to more than double over the next few years and that NRS itself could be worth $30 per IDT share in a few years’ time…” (Click here to see the full text)
Our calculations show that IDT Corporation (NYSE: IDT) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. IDT was in 9 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 10 funds in the previous quarter. IDT Corporation (NYSE: IDT) delivered a -25.90% return in the past 3 months.
In February 2022, we also shared another hedge fund’s views on IDT in another article. 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.
