Rhizome Partners, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. For the second quarter of 2022, Rhizome Partners generated a net loss of 9.1% versus a 16.1% loss for the Standard & Poor’s 500 Index and a 14.7% loss for the National Association of Real Estate Investment Trusts (NAREIT) Index. During the quarter, the fund’s hedging efforts generated about 5.5% of gains. The hedging gains were the primary contributor to Rhizome’s outperformance in the S&P 500 and the NAREIT. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Rhizome Partners mentioned HireQuest, Inc. (NASDAQ:HQI) and explained its insights for the company. Founded in 2002, HireQuest, Inc. (NASDAQ:HQI) is a South Carolina-based privately held provider with a $189.5 million market capitalization. HireQuest, Inc. (NASDAQ:HQI) delivered a -31.94% return since the beginning of the year, while its 12-month returns are down by -26.04%. The stock closed at $13.72 per share on August 30, 2022.
Here is what Rhizome Partners has to say about HireQuest, Inc. (NASDAQ:HQI) in its Q2 2022 investor letter:
“Our smaller positions in both HireQuest and Cross Country Healthcare are trading around 10 times normalized P/FCF multiples. Both companies have long growth runways and are led by talented CEOs. The ongoing maintenance capital expenditures of both companies are minimal. We keep looking for ways to disprove both investment theses and have a hard time coming up with valid reasons. HireQuest is more cyclical because it’s tied to blue collar temporary staffing. But HireQuest has the unique know-how to acquire staffing companies and convert them into high-performing franchises. HireQuest has consistently paid about 5 times P/FCF multiple for the acquisitions. Adjusting for sales of branches locations to franchisees, the P/FCF multiple falls even further. The current acquisition strategy is better than a greenfield approach as the acquired free cashflow yield is over 20% and HireQuest does not have to compete for market share. We believe the company can grow to five times its current size, with little share-count dilution.”
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Our calculations show that HireQuest, Inc. (NASDAQ:HQI) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. HireQuest, Inc. (NASDAQ:HQI) was in 5 hedge fund portfolios at the end of the second quarter of 2022, compared to 5 funds in the previous quarter. HireQuest, Inc. (NASDAQ:HQI) delivered a -11.14% return in the past 3 months.
In August 2022, we also shared another hedge fund’s views on HireQuest, Inc. (NASDAQ:HQI) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
