Cedar Creek Partners LLC, an investment management firm, published its second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio return of 8.6% was recorded by the fund for the second quarter of 2021, below the NASDAQ Index, which delivered a 9.5% return for the same period. However, the fund outperformed the S&P 500 (SPY) Index’s 8.4% return, and the Russell Micro Cap’s respectable 4.1%. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Cedar Creek Partners LLC, the fund mentioned Solitron Devices, Inc. (NYSE: SODI), and discussed its stance on the firm. Solitron Devices, Inc. is a West Palm Beach, Florida-based electronic parts supplier, that currently has a $19.2 million market capitalization. SODI delivered a 60.87% return since the beginning of the year, extending its 12-month returns to 270.00%. The stock closed at $9.25 per share on July 23, 2021.
Here is what Cedar Creek Partners LLC has to say about Solitron Devices, Inc. in its Q2 2021 investor letter:
“Solitron Devices (SODI), where I am the CEO, the bid price for shares rose 22% in the quarter from $7.00 per share to $8.51. During the quarter, Solitron filed its audited financials for fiscal 2021, year ended February 28, 2021. For fiscal 2021 net income was $0.67 per share versus a loss of ($0.30) per share in fiscal 2020. Net sales rose to $10.5 million in fiscal 2021 versus $9.2 million in fiscal 2020. Solitron also announced closing of an agreement to purchase a new building for $4.2 million. Solitron expects to make improvements to the building in order to relocate its existing operations later in the
calendar year. Solitron put 25% down and financed the balance at a 3.8% fixed rate. Late in June it was announced that net sales in the May 31, 2021 quarter were 45% higher than the May 31, 2020 quarter. On July 20 we filed our quarterly filing reporting net income of just over $1 million, or $0.49 per share, for the May 31, 2021 quarter versus $369,000 or $0.18 per share in the May 31, 2020 quarter.”
Based on our calculations, Solitron Devices, Inc. (NYSE: SODI) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Solitron Devices, Inc. (NYSE: SODI) delivered a 16.35% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
