Merion Road Capital Management, an investment management firm, published its fourth-quarter 2020 Investor Letter for its ‘MRCM Long Short Small Cap’ and ‘MRCM Long Only Large Cap’– a copy of which can be downloaded here. A return of 11.5% was recorded by its Long Short Small Cap fund for the Q4 of 2020, outperforming its Barclay Hedge Fund index that made a 9% return, but below its Russell 2000 benchmark that delivered 31.3%. Its Long Only Large Cap fund delivered a 21.2% return, above its S&P 500 benchmark that accumulated 12.1%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Merion Road Capital Management, in their Q4 2020 Investor Letter, said that Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) was the largest detractor for their ‘Small Cap’ portfolio during the fourth quarter of 2020. Rocky Mountain Chocolate Factory, Inc. is a chocolate global franchisor, confectionary manufacturer, and retail operator that currently has a $38.9 million market cap. For the past 3 months, RMCF delivered a decent 87.72% return and settled at $6.42 per share at the closing of February 11th.
Here is what Merion Road Capital Management has to say about Rocky Mountain Chocolate Factory, Inc. in their Q4 2020 investor letter:
“Our largest detractor was Rocky Mountain Chocolate Factory (“RMCF”) which got caught in the cross-hairs of the pandemic. As I discussed in my Q1 letter, my entry was poorly timed though I continued to hold as I thought that the company possessed enough liquidity to manage through the crisis and that there would be tremendous upside should they make it to the other side. While I still believe the latter to be true, I ended up selling the stock in the back half of the year as I became increasingly concerned about the company’s ability to manage costs and their failure to secure additional financing.
RMCF delivered a -22.74% return in the past 12 months. Our calculations show that Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) does not belong in our list of the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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