If you are looking for the best ideas for your portfolio you may want to consider some of RF Capital’s top stock picks. RF Capital, an investment management firm, is bullish on Zagg Inc (NASDAQ:ZAGG) stock. In its Q3 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Zagg Inc (NASDAQ:ZAGG) stock. Zagg Inc (NASDAQ:ZAGG) is a consumer electronics company.
In October 2019, RF Capital had released its Q3 2019 investor letter. The investment firm said that Zagg Inc (NASDAQ:ZAGG) was one of the top 5 holdings in Q3 2019. The stock has posted a return of -48.3% in the trailing one year period, underperforming the S&P 500 Index which returned 15.1% in the same period. This suggests that the investment firm was wrong in its decision.
RF Capital fund posted a return of -6.98% in the third quarter of 2019, underperforming the S&P 500 Index which returned 1.87% in the same quarter. Let’s take a look at comments made by RF Capital about Zagg Inc (NASDAQ:ZAGG) in the Q3 2019 investor letter.
“Zagg (ZAGG) – Smartphone sales have been down this year, and Zagg’s Q2 earnings reflect that. Due to the challenged screen protection and wireless charging businesses, ZAGG has reduced its revenue outlook for the year. However, Q3 and Q4 earnings should help Zagg generate $40 million in free cash flow for 2019.
ZAGG has also retained Bank of America Merrill Lynch to explore strategic alternatives. Several firms have expressed interest in acquiring ZAGG. Potential bidders include Acco Brands and a private equity firm, which sent a letter to the board saying it would be willing to pay $9 per share. ZAGG aims to conclude the bidding process in November.
The company projects $60 million in 2020 EBIT and believes the company is worth 7x EBIT. Our average cost was $7.06 per share. If acquired for $9-$11 per share within the next year, our return on investment would be quite satisfactory.”
In April, we published an article revealing that RF Capital sold its position in Zagg Inc (NASDAQ:ZAGG) stock in the first quarter of 2020. The investment firm sold due to the negative momentum.
In Q1 2020, the number of bullish hedge fund positions on Zagg Inc (NASDAQ:ZAGG) stock decreased by about 11% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in Zagg’s growth potential. Our calculations showed that Zagg Inc (NASDAQ:ZAGG) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:
Disclosure: None. This article is originally published at Insider Monkey.
