Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, published its “Longleaf Partners Global Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. Longleaf Partners Global Fund added 3.00% in the fourth quarter versus MSCI World’s return of 7.77%. For the full year, the Fund added 8.20%, while the MSCI World returned 21.82%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Longleaf Partners Global Fund, in its Q4 2021 investor letter, mentioned Millicom International Cellular S.A. (NASDAQ: TIGO) and discussed its stance on the firm. Millicom International Cellular S.A. is a Luxembourg, Luxembourg-based markets telecom provider with a $2.3 billion market capitalization. TIGO delivered a -18.35% return since the beginning of the year, while its 12-month returns are down by -39.35%. The stock closed at $23.23 per share on February 28, 2022.
Here is what Longleaf Partners Global Fund has to say about Millicom International Cellular S.A. in its Q4 2021 investor letter:
“Millicom (TIGO) (-28%, -1.46%; -21%, -1.04%), the Latin American cable company, was the largest detractor in the fourth quarter and a top detractor for the year. From the beginning of 2021 through November 12, Millicom’s price was down slightly. At that point, we thought this to be somewhat unjustified since 2021 cash flow was up and was in line with projections, and free cash flow was being allocated mostly to grow the cable business in double digits in terms of subscribers and revenues. Through that point of the year, our appraisal for all of Millicom had grown at a healthy clip. Then on November 12, TIGO announced a very important strategic acquisition: buying in the half of its Guatemala business which Millicom didn’t already own. It happened very quickly, and at a very attractive multiple; but because of the suddenness of the event, the TIGO balance sheet was not prepared for a cash-only purchase. So the company announced a debt deal for two-thirds of the purchase price and an equity rights offering for one-third. The rights offering can’t happen until 2021 year-end financials are completed in the first quarter of 2022, and this has created a severe “overhang.” There are plenty of bears on Millicom, on Latin America, on telecom, etc., who either don’t buy or who have shorted Millicom. Among the Millicom bulls, in our small sample of contacts, they are waiting for the rights offering to add to positions. Additionally, taxloss selling probably exacerbated the stock price weakness late in the quarter. We believe that the accretion to our appraisal and to FCF per share, and as well as the strategic benefit of fully owning and consolidating the Guatemala business, makes this a very wise allocation of capital for Millicom. Additionally, company operations, especially cable, continue to perform very well. But we are paying a steep short-term price since the announcement.”
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Our calculations show that Millicom International Cellular S.A. (NASDAQ: TIGO) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. TIGO was in 10 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 7 funds in the previous quarter. Millicom International Cellular S.A. (NASDAQ: TIGO) delivered a -25.71% return in the past 3 months.
In December 2021, we also shared another hedge fund’s views on TIGO in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
