SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the strategy returned 4.22% on a gross basis compared to a 2.74% return for the Russell 2000 Index and -0.66% for the Russell 2000 Value Index. Since its inception, the strategy has continued to outperform both indexes on an annualized gross and net basis. In addition, please check the top 5 holdings of the strategy to know its best pick in 2023.
SouthernSun Small Cap Strategy highlighted stocks like Clean Harbors, Inc. (NYSE:CLH) in the first quarter 2023 investor letter. Headquartered in Norwell, Massachusetts, Clean Harbors, Inc. (NYSE:CLH) operates through Environmental Services and the Safety-Kleen Sustainability Solutions segments. On May 3, 2023, Clean Harbors, Inc. (NYSE:CLH) stock closed at $137.51 per share. One-month return of Clean Harbors, Inc. (NYSE:CLH) was 2.67%, and its shares gained 43.12% of their value over the last 52 weeks. Clean Harbors, Inc. (NYSE:CLH) has a market capitalization of $7.546 billion.
SouthernSun Small Cap Strategy made the following comment about Clean Harbors, Inc. (NYSE:CLH) in its Q1 2023 investor letter:
“We exited our position in Clean Harbors, Inc. (NYSE:CLH) during the quarter. Clean Harbors is North America’s leading provider of environmental and industrial services including end-to-end hazardous waste management, emergency spill response, industrial cleaning and maintenance and recycling services. They are also America’s largest re-refiner and recycler of used motor oil.
We first purchased shares in Clean Harbors in 2013 and persevered through a sharp and protracted decline in oil prices beginning in 2014, in addition to an industrial recession in 2015/16 and again in 2020. The company has experienced significant tailwinds in 2021 and 2022, with strong industrial production and improved oil price dynamics, and we ultimately took the opportunity to sell our position in the quarter at near record high levels for the stock. Our mid-single digit returns over our holding period are below the bar for a SouthernSun business, even if the returns are not too different than the benchmarks over that timeframe. We continue to press ourselves to learn not only from our “winners” and “losers”, but also our mediocre performers. The unpacking of this investment over the coming quarters and years will no doubt produce fruit for future underwritings.
Founder and long-time CEO, Alan McKim, announced his retirement late last year, and while we believe the team he leaves behind is capable, we also believe this is a highly capital intensive business which requires high capacity utilization to maximize cash flow. In addition, this is a North America only company with no sights set on international expansion. Given substantial market share in their core business, we believe that further growth is limited in the absence of M&A that might need to be outside of that core – potentially increasing risk without sufficient reward, in our opinion.”
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Clean Harbors, Inc. (NYSE:CLH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held Clean Harbors, Inc. (NYSE:CLH) at the end of the fourth quarter which was 30 in the previous quarter.
We discussed Clean Harbors, Inc. (NYSE:CLH) in another article and shared the list of best waste management stocks to buy. In addition, please check out our hedge fund investor letters Q1 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.
