Moon Capital Management, an investment management company, released its second-quarter 2023 investor letter. A copy of the same can be downloaded here. The stock prices moved extraordinarily during the first half and the S&P 500 increased approximately 16% during the period. The fund increased approximately 11% in the first half of 2023 lagging behind the S&P500’s 15.9% return. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Moon Capital Management highlighted stocks like First American Financial Corporation (NYSE:FAF) in the second quarter 2023 investor letter. Headquartered in Santa Ana, California, First American Financial Corporation (NYSE:FAF) provides financial services. On July 21, 2023, First American Financial Corporation (NYSE:FAF) stock closed at $58.80 per share. One-month return of First American Financial Corporation (NYSE:FAF) was 4.38%, and its shares gained 4.81% of their value over the last 52 weeks. First American Financial Corporation (NYSE:FAF) has a market capitalization of $6.069 billion.
Moon Capital Management made the following comment about First American Financial Corporation (NYSE:FAF) in its second quarter 2023 investor letter:
“During the second quarter, we fully liquidated two of our positions: title insurer First American Financial Corporation (NYSE:FAF) and bank software services provider MeridianLink (MLNK). We sold our shares of First American Financial with a small gain, while we lost approximately 20% on our Meridianlink investment.
Although residential housing pricing has remained relatively strong, the business models of both FAF and MLNK are, to a certain degree, reliant on housing transaction volumes. In most environments, these high-margin royalty streams make for attractive business models. Today, however, both companies are swimming upstream against a heavy interest rate current. Over the past year, transaction volume in the residential market has moved materially lower and the market for refinancing has nearly dried up. In fact, the second half of 2022 marked the largest decline in home sales ever recorded in U.S. history. Mortgage applications recently hit a 28-year low, as more potential buyers have chosen to stay in their current homes instead of moving.
We suspect that refinancing will likely experience a multiyear period of weakness because most homeowners can no longer refinance at lower rates. As noted in a recent Wall Street Journal piece, roughly 14 million homeowners have mortgage rates below 3% and another 20 million have rates between 3-4%. Combined, these groups represent two-thirds of all primary mortgages. Given the unfavorable macro backdrop for businesses reliant on mortgage transaction volume, we chose to redeploy our capital away from FAF and MLNK.”
First American Financial Corporation (NYSE:FAF) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held First American Financial Corporation (NYSE:FAF) at the end of first quarter which was 28 in the previous quarter.
We discussed First American Financial Corporation (NYSE:FAF) in another article and shared the list of best insurance dividend stocks to buy. In addition, please check out our hedge fund investor letters Q2 2023 page for more investor letters from hedge funds and other leading investors.
Suggested Articles:
- 25 Most Visited Cities in North America
- 15 Most Consumed Crops in the World
- 12 Under-the-Radar Stocks That Are on The Move
Disclosure: None. This article is originally published at Insider Monkey.
