We recently published a list of Top 10 Stocks to Buy According to 12 West Capital Management. In this article, we are going to take a look at where Kura Sushi USA, Inc. (NASDAQ:KRUS) stands against other top stocks to buy according to 12 West Capital Management.
Joel Ramin founded 12 West Capital Management in August 2011, establishing it as a New York-based hedge fund specializing in global investments across equities, equity-related instruments, and credit securities. Prior to launching 12 West, Ramin worked as an analyst at Bridger Capital, gaining experience in both long equity positions and short-selling strategies. Currently, he serves as the firm’s Managing Member and Portfolio Manager, overseeing investment decisions and advisory services for institutional investors in the United States.
12 West Capital Management focuses on providing tailored investment management solutions, leveraging a research-driven approach to identify opportunities across various markets. The firm actively engages in both long-term and short-term investments, aiming to maximize returns through strategic asset allocation and risk management. Its expertise spans multiple asset classes, allowing it to adapt to changing market conditions while delivering value to its clients.
Joel Ramin holds a degree from the McIntire School of Commerce, where he completed his undergraduate studies in finance in 2000. His background in finance and investment, combined with his experience at Bridger Capital, has shaped his approach to portfolio management at 12 West Capital. Under his leadership, the firm has built a reputation for its disciplined investment strategies and commitment to generating long-term growth for its investors.
According to its most recent 13F filing for the fourth quarter of 2024, 12 West Capital Management reported nearly $954.6 million in managed 13F securities, with its top 10 holdings accounting for a hefty 90.75% of its portfolio.
Our Methodology
The stocks discussed below were picked from 12 West Capital Management’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1009 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a sushi chef, displaying his care and attention to detail in making a dish.
Kura Sushi USA, Inc. (NASDAQ:KRUS)
Number of Hedge Fund Holders as of Q4: 16
12 West Capital Management’s Equity Stake: $50.4 Million
Kura Sushi USA, Inc. (NASDAQ:KRUS) is a Japanese conveyor belt sushi restaurant chain founded in 1977. Headquartered in Sakai, Osaka, the company is the second-largest sushi chain in Japan, operating 543 locations in Japan, 56 in Taiwan, and 70 in the United States. It reported strong quarterly performance, with revenue increasing by 25.2%, driven by both store expansion and improved same-store sales. Comparable store sales rose by 1.8%, reversing a previous decline, and are expected to continue growing throughout the year. During the quarter, the company added six new locations, contributing to a total increase of 16 stores compared to the prior year, representing a 26% expansion. Given this pace, the company’s forecast of 15% fiscal-year growth appears conservative.
Although Kura Sushi USA, Inc. (NASDAQ:KRUS) faced some margin pressure due to expansion costs, the impact was less severe than anticipated. Operating efficiencies and controlled spending helped mitigate rising wages and inflation, leading to a significant reduction in corporate-level operating losses. The restaurant-level operating margin remained positive at approximately 18%, while overall operating losses declined to $1.5 million, nearly 50% lower than the previous year. While management’s guidance appeared cautious compared to analyst expectations, it reflects anticipated same-store sales growth alongside a store expansion rate exceeding 20%. This trajectory is expected to continue into 2025, reinforcing the company’s long-term growth strategy.
Kura Sushi USA, Inc. (NASDAQ:KRUS)’s balance sheet remains strong, with no long-term debt, a 50% increase in equity, and minimal liabilities: total liabilities stand at less than 0.8 times equity and 0.5 times assets. With only 70 locations in operation within the U.S., there is significant room for expansion, especially when compared to other fast-casual chains such as Chipotle Mexican Grill, which operates over 3,500 locations and continues to grow. Analyst sentiment following the Q1 earnings report has been positive, with multiple price target increases maintaining a “Moderate Buy” rating. These revised targets range from $90 to $120, with an average of approximately $103, representing a potential 15% to 25% upside.
Middle Coast Investing stated the following regarding Kura Sushi USA, Inc. (NASDAQ:KRUS) in its Q4 2024 investor letter:
“I wrote up Portillo’s briefly in Q3, where I had executed a pair trade with Kura Sushi USA, Inc. (NASDAQ:KRUS), buying Portillo’s shares and selling Kura Sushi short. That trade worked on a short-term basis, and while I unsuccessfully shorted Kura again (see below), I also decided to open a Portillo’s position.
I mentioned KRUS above. We closed our short the second time around at $90, shortly after the company’s Q3 which I thought was quite bad but didn’t really hit the stock. There’s no obvious catalyst to correct the company’s value, and I am probably missing the bull case. I only short in personal accounts.”
Overall, KRUS ranks 6th on our list of top stocks to buy according to 12 West Capital Management. While we acknowledge the potential for KRUS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KRUS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.