Choice Equities Capital Management, a hedge fund manager, released its third-quarter investor letter recently. You can view it here. In the third quarter, the fund returned -1.7% on a net basis compared to -2.2% loss for the Russell 2000 Index and -4.9% loss for the S&P 500 Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Choice Equities highlighted stocks like WESCO International, Inc. (NYSE:WCC) in the Q3 2022 investor letter. WESCO International, Inc. (NYSE:WCC) is a supply chain solutions provider headquartered in Pittsburgh, Pennsylvania. On December 13, 2022, WESCO International, Inc. (NYSE:WCC) stock closed at $128.23 per share. One-month return of WESCO International, Inc. (NYSE:WCC) was -0.43%% and its shares gained 5.25% of their value over the last 52 weeks. WESCO International, Inc. (NYSE:WCC) has a market capitalization of $6.52 billion.
Choice Equities made the following comment about WESCO International, Inc. (NYSE:WCC) in its Q3 2022 investor letter:
“WESCO International, Inc. (NYSE:WCC) – For most of its history since its carveout from Westinghouse Electric Corporation almost 30 years ago, Wesco, Inc. was one of a handful of leading distributors of electrical products. The business was often characterized as “three bids and a buy”, given their utility customers highly planned capital project spending and their desire to shop around for the best price. Spending was somewhat cyclical, and pricing was competitive.
Wesco’s 2020 purchase of Anixter Inc. improves on many of these dynamics. Now the #1 player by size in the US, the company is benefitting from an expanded customer list while capitalizing on greater economies of scale in areas like purchasing and distribution. The company’s end markets have changed for the better too, with a higher proportion of sales now driven by secular needs that support the growth of electricity demand and green energy. Initiatives like grid modernization and expanded electric vehicle charging networks are durable investment themes, particularly considering the government spending increases that supports these infrastructure buildouts.
The purchase of Anixter has been a good one, enabling Wesco to move operating margins a step function higher as it capitalizes on synergies gained in the acquisition. After quickly de-levering their balance sheet from above 6x to now less than 3x since the acquisition, the company recently authorized a sizeable stock repurchase program. Now trading at ~8x PE and ~7x EBITDA, the stock presents a compelling value, particularly for a company with a monopoly-like competitive position, durable end market drivers and a low-double digit or better earnings growth profile.”
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WESCO International, Inc. (NYSE:WCC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held WESCO International, Inc. (NYSE:WCC) at the end of the third quarter which was 48 in the previous quarter.
We discussed WESCO International, Inc. (NYSE:WCC) in another article and discussed whether Peter Avellone’s Cartenna Capital picked the right stocks in the third quarter of last year. In addition, please check out our hedge fund investor letters Q3 2022 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.
