Investment management company Cove Street Capital recently released its “Small Cap Value Fund” second quarter 2023 investor letter. A copy of the same can be downloaded here. On a relative and absolute basis, the fund continued its solid upward movement in the second quarter and returned 14.8% compared to 5.21% for the Russell 2000 Index and 3.18% for the Russell 2000 Value Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Cove Street Capital highlighted stocks like Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) in the second quarter 2023 investor letter. Headquartered in Houston, Texas, Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) is a dredging services provider. On July 11, 2023, Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) stock closed at $8.20 per share. One-month return of Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) was 8.32%, and its shares lost 30.09% of their value over the last 52 weeks. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) has a market capitalization of $545.946 million.
Cove Street Capital made the following comment about Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) in its second quarter 2023 investor letter:
At the end of 2022, we initiated a position in Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) in the midst of a significant decline in the company’s results. Facilitated by the U.S. government, the “bid market” of projects for which GLDD competes evaporated in the first half of 2022 due to some combination of an extra-long Continuing Resolution, overly complicated budget authorization and allocation processes, and frankly, work-from-home inefficiencies. When your dredgers aren’t at work because you didn’t get your bid, you send them to the shipyard for maintenance, causing a “double-whammy” of less revenue and higher costs. GLDD’s margins in 2022 got crushed, as did the stock price. Ultimately, these are projects that have to get done both for national security and economic purposes – ports have to be a certain depth for shippers and other vessels to enter. These big projects did not go away but were delayed. Great Lakes ultimately operates downstream from a record $2.3 billion fund budgeted by the U.S. government for these projects in 2023, and our investment was predicated on a return of the aforementioned “bid market.” Domestic dredging has seen a $600m bid market for the first 4 months of the year, which is both 3x what it was for the comparable period last year and 160% of the comparable 5-year average. There remain concerns that the government is not yet “back to normal” in its ability to…function and award these contracts. Notwithstanding, the stock has rallied in the quarter reflecting the progress to start 2023.”
Copyright: nightman1965 / 123RF Stock Photo
Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) at the end of first quarter 2023 which was 17 in the previous quarter.
We discussed Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) in another article and shared Cove Street Capital’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 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.
