Hayden Capital, a value-oriented investment firm, released its third quarter 2023 investor letter. A copy of the same can be downloaded here. The portfolio rose in the third quarter and returned 11.6% (net) compared to (3.3%) return for the S&P 500 Index and (3.7%) return for the MSCI World Index. Several holding companies began to exhibit indications of reaccelerating growth in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Hayden Capital highlighted stocks like The Procter & Gamble Company (NYSE:PG) in the third quarter 2023 investor letter. Headquartered in Cincinnati, Ohio, The Procter & Gamble Company (NYSE:PG) offers branded consumer packaged goods. On December 11, 2023, The Procter & Gamble Company (NYSE:PG) stock closed at $145.82 per share. One-month return of The Procter & Gamble Company (NYSE:PG) was -4.14%, and its shares lost 4.22% of their value over the last three months. The Procter & Gamble Company (NYSE:PG) has a market capitalization of $343.682 billion.
Hayden Capital made the following comment about The Procter & Gamble Company (NYSE:PG) in its third 2023 investor letter:
“It’s not just emerging markets either, where one could argue a “scarcity premium” given fewer quality public companies. Even in the US, Coca-Cola trades at ~30x P/E despite having the same earnings as 10 years ago. The Procter & Gamble Company (NYSE:PG) is likewise at ~27x P/E, with earnings only ~12% higher than a decade ago (or a ~1% annual growth rate). This equates to a mere 3.3% – 3.7% earnings yield.
Both of these companies actually have lower revenues than 10 – 15 years ago too, indicating that their profit growth is mostly from margin expansion. This can only last for so long before there’s no more excess expenses left to cut.
I find it ironic that all these companies trade as “bond-equivalents” in the minds of investors – even commanding lower yields than US treasuries, the safest security in the world. But it’s clear that their businesses are not nearly as safe. Proctor & Gamble is facing disruption from direct-to-consumer brands that offer their products for a fraction of the price.
But these companies are ~35% more expensive than US Treasuries, despite the heightened risk. On a risk-adjusted basis, one could argue the implied premium is even higher.
Perhaps the explanation is simply the price volatility difference between these stocks and treasuries over the last two years. For example, 10-year Treasury bonds are down ~-20% since the beginning of 2022. By comparison, KO and PG are remarkably down only -4 – 6% over that time frame.”
A supermarket shelf overflowing with a variety of fast-moving consumer goods.
The Procter & Gamble Company (NYSE:PG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 75 hedge fund portfolios held The Procter & Gamble Company (NYSE:PG) at the end of third quarter which was 74 in the previous quarter.
We discussed The Procter & Gamble Company (NYSE:PG) in another article and shared the list of best Ray Dalio stocks other billionaires are also buying. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
