Nordstern Capital, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. In its 2022 first-quarter letter, the fund emphasized that valuation is important, that prices will climb and shortages will worsen until inflation beneficiaries are rewarded by profits high enough to attract additional investment. Additionally, the fund mentioned that any ideal investment is priced cheaply in relation to the present value of its future cash flows, and the future cash flows should be benefitting from inflation and should be antifragile in a recession. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Nordstern Capital mentioned StoneCo Ltd. (NASDAQ:STNE) and explained its insights for the company. Founded in 2000, StoneCo Ltd. (NASDAQ:STNE) is a Cayman Islands-based financial technology solutions provider with a $2.9 billion market capitalization. StoneCo Ltd. (NASDAQ:STNE) delivered a -44.07% return since the beginning of the year, while its 12-month returns are down by -85.71%. The stock closed at $9.43 per share on May 25, 2022.
Here is what Nordstern Capital has to say about StoneCo Ltd. (NASDAQ:STNE) in its Q1 2022 investor letter:
“StoneCo Ltd (Stone) shares suffered a steep price decline in the quarter, extending last year’s fall. However, while 2021 was a disaster for Stone, the March earnings call indicated a strong recovery for the business. Management expects Stone to improve margins and at the same time to continue hypergrowth throughout 202210. The business is profitable and currently trades at around 4-times EBITDA. Such a low multiple implies that ‘the market’ expects the business to significantly decline. Either management or the market must be wrong.
Stone has grown clients for its payment services every quarter over the past five years from 83,000 to 1.8 million. Throughout the past year Stone made multiple acquisitions, donated money to causes related to the pandemic, repurchased shares, massively increased headcount, and bought shares in other listed companies. This does not sound like a business that is headed for bankruptcy. Stone is going to be a winner.”
SFIO CRACHO/Shutterstock.com
Our calculations show that StoneCo Ltd. (NASDAQ:STNE) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. StoneCo Ltd. (NASDAQ:STNE) was in 43 hedge fund portfolios at the end of the first quarter of 2022, compared to 35 funds in the previous quarter. StoneCo Ltd. (NASDAQ:STNE) delivered a -10.28% return in the past 3 months.
In April 2022, we also shared another hedge fund’s views on StoneCo Ltd. (NASDAQ:STNE) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
