Greenhaven Road Capital, an investment management company, released its fourth quarter 2022 investor letter. A copy of the same can be downloaded here. The fund returned -4.3% net in the fourth quarter. The fund’s performance compares favorably on a three- and five-year basis. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Greenhaven Road Capital highlighted stocks like Clarus Corporation (NASDAQ:CLAR) in the Q4 2022 investor letter. Headquartered in Salt Lake City, Utah, Clarus Corporation (NASDAQ:CLAR) is an outdoor equipment and lifestyle products manufacturer. On February 13, 2023, Clarus Corporation (NASDAQ:CLAR) stock closed at $9.88 per share. One-month return of Clarus Corporation (NASDAQ:CLAR) was 5.56%, and its shares lost 57.02% of their value over the last 52 weeks. Clarus Corporation (NASDAQ:CLAR) has a market capitalization of $365.921 million.
Greenhaven Road Capital made the following comment about Clarus Corporation (NASDAQ:CLAR) in its Q4 2022 investor letter:
“The 2022 price chart for Clarus Corporation (NASDAQ:CLAR) looks a bit unusual, bouncing around $20 per share for most of the year, spiking up to $28, and then plummeting to less than $8, a level not seen since 2019. The short interest in Clarus exploded, as did trading volumes. There were approximately 37.3M shares outstanding in July 2022. In August, 87M shares traded – 20 times what traded in several previous months. In the last 4 days of August, more than 37M shares traded hands on no obvious news. It’s typically an enormous waste of time to try to explain short-term moves in stocks, but here we can find some breadcrumbs. A Brazilian hedge fund seems to have blown up (link) and a large quantitative options fund seems to have inadvertently acquired enough shares of stock (4.3M) and call options (3.9M) by the end of July that fully exercising them would have resulted in the firm owning 21.9% of the company. By the end of August, that firm sold all but 300k shares but grew its options position to 11.8M which, if fully exercised, would have resulted in 32.4% ownership. We will come back to this massive options position, but the main point here is that a large portion of the buyers and sellers were one fund being margin called (seller) and a fund that quickly acquired and divested a disproportionately large exposure to Clarus.
Our purchase prices were around $8 per share, which implies a market capitalization of roughly $300M. The company does have debt, which should have been approximately $135M as of year-end, and also should have ended the year with $100M+ of inventory. What does Clarus do? I suspect that the options firm had no idea, but this is how Clarus describes itself:
“Clarus Corporation is a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor and consumer enthusiast markets. Our mission is to identify, acquire and grow outdoor ‘super fan’ brands through our unique ‘innovate and accelerate’ strategy. We define a ‘super fan’ brand as a brand that creates the world’s pre-eminent, performance-defining product that the best-in-class user cannot live without.”…” (Click here to read the full text)
Hurst Photo/Shutterstock.com
Clarus Corporation (NASDAQ:CLAR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held Clarus Corporation (NASDAQ:CLAR) at the end of the third quarter which was 18 in the previous quarter.
We discussed Clarus Corporation (NASDAQ:CLAR) in another article and shared the list of biggest outdoor brands and companies. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
Suggested Articles:
- 16 Most Valuable Japanese Companies
- 10 Largest Economies in Europe
- 16 Most Valuable Korean Companies
Disclosure: None. This article is originally published at Insider Monkey.
