McIntyre Partnerships, an investment management company, released its fourth quarter 2023 investor letter. A copy of the same can be downloaded here. McIntyre Partnerships’ returns for YE 2023 were around 48% gross and 38% net. This is compared to a 15% return on the Russell 2000 Value index, which includes dividends. Its five-year return CAGR is 21% net, with 16% net returns since inception, compared to the Russell 2000 Value’s 10% and 6%, respectively. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
McIntyre Partnerships featured stocks such as Sotera Health Company (NASDAQ:SHC) in the fourth quarter 2023 investor letter. Headquartered in Broadview Heights, Ohio, Sotera Health Company (NASDAQ:SHC) offers sterilization, and lab testing and advisory services. On January 29, 2024, Sotera Health Company (NASDAQ:SHC) stock closed at $15.02 per share. One-month return of Sotera Health Company (NASDAQ:SHC) was -10.33%, and its shares lost 12.88% of their value over the last 52 weeks. Sotera Health Company (NASDAQ:SHC) has a market capitalization of $4.245 billion.
McIntyre Partnerships stated the following regarding Sotera Health Company (NASDAQ:SHC) in its fourth quarter 2023 investor letter:
“The notable outlier to our “generally good” overall portfolio was Sotera Health Company (NASDAQ:SHC), where the settlement I was expecting drove shares up by over 100% in January 2023. In response to the outsized move, I reduced the position by roughly half. After its January surge, SHC’s shares have largely been range-bound. Despite the significant gain and lackluster performance since, I believe SHC remains a compelling investment. It is the fund’s largest position, and I go into greater depth below.
At quarter end, our exposures are 102% long, 6% short, and 96% net. Our five largest positions are SHC, OSW, GTX, record labels, and STHO/SAFE, and account for roughly 80% of assets.
In a vacuum, SHC screens as my ideal type of business: one half of a duopoly market with good long-term growth where the product sold is mission critical to customers, with high switching costs, yet the product’s cost is immaterial to their customers. In the case of SHC, the company is one of two scaled outsourced providers of medical device and pharmaceutical sterilization services. SHC is diversified across almost all major medical device and pharmaceutical manufacturers, boasts a 100% retention rate with top customers, and has consistently grown sales at close to 10%. Further, sterilization represents ~1% of their customers’ cost of goods sold, and SHC has an ~55% EBITDA margin. Normally, a consistent 10% growth story with 55% margins would trade at a significant multiple. Indeed, from when SHC IPOed in late 2020 until legal fears derailed the stock in fall 2022, shares consistently traded over 18x EV/EBITDA and 25x P/E, yet shares currently trade less than 12x my 2024 EV/EBITDA and 15x my 2024 EPS…” (Click here to read the full text)
A scientist in lab coat testing a new biopharmaceutical drug on a microscope.
Sotera Health Company (NASDAQ:SHC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Sotera Health Company (NASDAQ:SHC) at the end of third quarter which was 25 in the previous quarter.
We discussed Sotera Health Company (NASDAQ:SHC) in another article and shared the list of stocks billionaire David Einhorn just bought and sold. 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.
