Legacy Ridge Capital Management, LLC recently published its “Legacy Ridge Capital Partners Equity Fund I” fourth quarter 2023 investor letter, which can be downloaded here. In 2023, the fund returned 36.5% gross and 28.4% net of performance fees. The portfolio contains a total of 9 positions, out of which the top 5 positions hold almost 70% of the portfolio’s value, while the top 3 positions alone account for over 50%. At the end of the year, the firm had around 14% of its assets in cash and equivalents. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Legacy Ridge Capital Management featured stocks such as Vistra Corp. (NYSE:VST) in the fourth quarter 2023 investor letter. Headquartered in Irving, Texas, Vistra Corp. (NYSE:VST) is an integrated retail electricity and power generation company. On January 29, 2024, Vistra Corp. (NYSE:VST) stock closed at $40.56 per share. One-month return of Vistra Corp. (NYSE:VST) was 6.54%, and its shares gained 75.89% of their value over the last 52 weeks. Vistra Corp. (NYSE:VST) has a market capitalization of $14.502 billion.
Legacy Ridge Capital Management stated the following regarding Vistra Corp. (NYSE:VST) in its fourth quarter 2023 investor letter:
“For 2023, Vistra Corp. (NYSE:VST) was our largest position and our best performer (69% total return). Finally, after a few years our investment thesis has started to play out. We believe there were several reasons for VST’s outperformance. First, electricity prices and forward curves were elevated during the first three quarters of the year, which resulted in positive financial updates and guidance over the short to mid-term. Second, the acquisition of Energy Harbor (ENGH) announced in March was viewed favorably given the nuclear capacity additions the transaction brings. Third, higher margins, less competition, and customer retention has resulted in increased profitability in the oft maligned retail segment; and management teams throughout the sector believe this trend is sustainable. And finally, a paradigm shift has started to occur in terms of how investors think about the terminal value of power generation assets.
Despite the significant gain in VST’s share price last year, we continue to believe that the current equity value trades at a large discount to intrinsic value. Our conviction in this mispricing is partly based on our view that the terminal value of VST’s asset portfolio is significantly higher than the market gives credit. Why else would a stable, yet growing business still have a cost of equity in excess of 20%? Terminal value has consistently been one of the biggest valuation concerns for deregulated power companies, and that’s largely a byproduct of society’s desire to eliminate any form of power generation that produces carbon emissions or radioactive waste…” (Click here to read the full text)
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Vistra Corp. (NYSE:VST) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 52 hedge fund portfolios held Vistra Corp. (NYSE:VST) at the end of third quarter which was 48 in the previous quarter.
We discussed Vistra Corp. (NYSE:VST) in another article and shared Meridian Hedged Equity Fund’s views on the company in the previous quarter. 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.
