Laughing Water Capital, an investment management company, released its fourth-quarter 2023 investor letter. A copy of the same can be downloaded here. In the fourth quarter, investment in the fund returned 3.2% bringing the yearly returns to 11.8%, net of all fees and expenses. The SP500TR and R2000 returned 11.7% and 14.0% during the quarter, respectively, bringing their year-to-date returns to 26.3% and 17.0%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Laughing Water Capital featured stocks such as Thryv Holdings, Inc. (NASDAQ:THRY) in the fourth quarter 2023 investor letter. Thryv Holdings, Inc. (NASDAQ:THRY) is a digital marketing solutions and cloud-based tools provider headquartered in DFW Airport, Texas. On January 29, 2024, Thryv Holdings, Inc. (NASDAQ:THRY) stock closed at $21.60 per share. One-month return of Thryv Holdings, Inc. (NASDAQ:THRY) was 6.14%, and its shares lost 3.44% of their value over the last 52 weeks. Thryv Holdings, Inc. (NASDAQ:THRY) has a market capitalization of $759.564 million.
Laughing Water Capital stated the following regarding Thryv Holdings, Inc. (NASDAQ:THRY) in its fourth quarter 2023 investor letter:
“Thryv Holdings, Inc. (NASDAQ:THRY) – Thryv, our SMB software business that is attached to a declining cash-cow marketing business (the Yellow Pages), had a great year from an operational perspective, having grown customer count 29%, added new centers, and paid down debt. The company also demonstrated that they can flex their operating structure to juice margins when necessary by choosing to rely more heavily on referrals for growth rather than paid search. However, as mentioned previously, it seems as if this year the market only cared about the fact that the Company has floating rate debt, although a wrinkle in GAAP revenue recognition rules that created an air pocket in revenue while not affecting cash flow may also be to blame for the stock’s lackluster performance.
Regardless, the Company is approaching the point where their SMB software offering will eclipse their declining marketing business in the not-too-distant future, and the operating leverage characteristic of software businesses will make itself known. Importantly, at that time the Company should be reclassified away from “Communications Services: Advertising” and into “Information Technology: Software” by the GICS system that controls what passive ETFS, quants, and even multi-manager pod-shops are allowed to invest in. This will open up the opportunity to a whole new class of investors, and should lead to a re-rating.
If the Company is able to hit their 5 year plan in 2027 the software business will be generating ~$200M in EBITDA. If Thryv is valued similarly to other scaled SMB software businesses, shares could appreciate by 300-400% from today’s levels. At that time, concerns surrounding interest rates will seem silly in hindsight.”
A marketing manager examining a publisher’s digital inventory on a laptop.
Thryv Holdings, Inc. (NASDAQ:THRY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held Thryv Holdings, Inc. (NASDAQ:THRY) at the end of third quarter which was 18 in the previous quarter.
We discussed Thryv Holdings, Inc. (NASDAQ:THRY) in another article and shared billionaire John Paulson’s Messy top stock picks. In addition, please check out our hedge fund investor letters Q4 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.
