Rhizome Partners, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. For the second quarter of 2022, Rhizome Partners generated a net loss of 9.1% versus a 16.1% loss for the Standard & Poor’s 500 Index and a 14.7% loss for the National Association of Real Estate Investment Trusts (NAREIT) Index. During the quarter, the fund’s hedging efforts generated about 5.5% of gains. The hedging gains were the primary contributor to Rhizome’s outperformance in the S&P 500 and the NAREIT. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Rhizome Partners mentioned Univar Solutions Inc. (NYSE:UNVR) and explained its insights for the company. Founded in 1924, Univar Solutions Inc. (NYSE:UNVR) is a Downers Grove, Illinois-based chemicals company with a $4.3 billion market capitalization. Univar Solutions Inc. (NYSE:UNVR) delivered a -8.61% return since the beginning of the year, while its 12-month returns are up by 7.47%. The stock closed at $25.91 per share on August 26, 2022.
Here is what Rhizome Partners has to say about Univar Solutions Inc. (NYSE:UNVR) in its Q2 2022 investor letter:
“Univar recently sold off about 25% and is now trading at 9-10 times its 2022 price-to-free-cash-flow (P/FCF) multiple with a little over 2 times net debt/EBITDA. Univar, Brenntag, Tricon, IMCD, Helm, and Azelis are the largest chemical distributors in a fragmented industry. Like many distribution businesses, route density is critically important. A truck that can make multiple stops on a route will have structural advantages over its smaller competitors. Univar has dense routes in North America, its key market. This unique advantage tends to compound over time. Traditionally, chemical distribution is a “pick up the phone and call your sale representative” business. Around the world, there are different degrees of digital penetration in the sales process, with Asia at the leading edge of technology adoption. Univar Solutions and Brenntag are the two leaders that have invested heavily in technology and e-commerce solutions for their customers. Smaller mom-and-pop operators lack the financial and human resources to invest in technology solutions. On the other hand, a purely digital marketplace for purchasing chemicals often struggles to gain critical transaction volume because of the lack of logistics and fulfillment capabilities. Customers can place their orders, but they cannot receive the orders in reasonable time. Dense routes consisting of warehouses and trucks located under 60 minutes driving distance are the “atoms” that prevent “bits” players from attacking the chemical-distribution business.”
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Our calculations show that Univar Solutions Inc. (NYSE:UNVR) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Univar Solutions Inc. (NYSE:UNVR) was in 33 hedge fund portfolios at the end of the second quarter of 2022, compared to 33 funds in the previous quarter. Univar Solutions Inc. (NYSE:UNVR) delivered a -16.93% return in the past 3 months.
In June 2022, we also shared another hedge fund’s views on Univar Solutions Inc. (NYSE:UNVR) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
