Maran Capital Management, an investment management firm, published its second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly median account return of +24.9% net of fees was recorded by the fund for the second quarter of 2021, bringing year-to-date returns to +53.1%, net. Over the past five years, the partnership has compounded at the annualized rate of +26.2%, net, based on the fund’s standard fee structure. 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 Maran Capital Management, the fund mentioned American Outdoor Brands, Inc. (NASDAQ: AOUT), and discussed its stance on the firm. American Outdoor Brands, Inc. is a Columbia, Missouri-based outdoor sports and recreation products manufacturer, that currently has a $390.2 million market capitalization. AOUT delivered a 62.60% return since the beginning of the year, while its 3-month returns are up by 7.12%. The stock closed at $27.69 per share on July 29, 2021.
Here is what Maran Capital Management has to say about American Outdoor Brands, Inc. in its Q2 2021 investor letter:
“We continue to hold core positions in previously disclosed companies (including) American Outdoor Brands (AOUT). Each are asset-light, branded, buy-and-build growth companies operating in various areas of the consumer sector. American Outdoor Brands reported fiscal full-year 2021 results last week. While results were excellent, AOUT’s typically conservative guidance disappointed the market. AOUT’s valuation at sub-7x EBITDA looking forward over the next year remains cheap. The company will end 2022 with well over 25% of the current market cap in net cash if it doesn’t make any acquisitions in the interim.”
Based on our calculations, American Outdoor Brands, Inc. (NASDAQ: AOUT) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. AOUT was in 16 hedge fund portfolios at the end of the first quarter of 2021, compared to 13 funds in the fourth quarter of 2020. American Outdoor Brands, Inc. (NASDAQ: AOUT) delivered a -18.56% return in the past month.
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.
