Should You Consider Buying Sono-Tek Corporation (SOTK) Shares?

Long Cast Advisers, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. For the 4Q21 quarter (ended December 31, 2021), cumulative net returns of the fund were flat. For the year, net returns were 42%. Since inception in November 2015 through quarter-end 3Q21, LCA returned a cumulative 175% net of fees, or 18% CAGR. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Long Cast Advisers, mentioned Sono-Tek Corporation (NASDAQ: SOTK) and discussed its stance on the firm. Sono-Tek Corporation is a Milton, New York-based ultrasonic spray systems manufacturing company with an $80.9 million market capitalization. SOTK delivered a -30.70% return since the beginning of the year, while its 12-month returns are up by 19.77%. The stock closed at $5.15 per share on February 28, 2022.

Here is what Long Cast Advisers has to say about Sono-Tek Corporation in its Q4 2021 investor letter:

“Sono-Tek (SOTK): This $120M market cap company does one thing – designs and manufactures ultrasonic spray nozzles – and they do it well. They are an innovator in the space, which has plenty of copycats. Products are used where precision thin film deposition – a coating – is critically important at very specific layers and with limited waste.

Over the last eight years, the company has made a concerted effort to “get closer to the end customer” by not just producing nozzles for OEM’s but developing and building systems for the end customer.
This has resulted in larger system sales and higher ARPU’s. It also shows evidence of long term patient thinking by management.

Every few years new uses for the technology are found. Most recently SOTK’s nozzles are being utilized to spray the platinum catalysts onto the separators in hydrogen fuel cells. It is expanding its manufacturing and moving from units that provide batch spray-coating to roll-to-roll coating, a necessary step for production at scale. With ~$10B in the infrastructure bill for the development of “hydrogen as clean energy”, there appears to be a wide opportunity pathway for this company to grow beyond its current size, potentially by several orders of magnitude over time.”

Andrey Armyagov/Shutterstock.com

Our calculations show that Sono-Tek Corporation (NASDAQ: SOTK) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. SOTK was in 2 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 0 funds in the previous quarter. Sono-Tek Corporation (NASDAQ: SOTK) delivered a -17.20% return in the past 3 months. 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.