ClearBridge Investments, an investment management firm, published its “Small Cap Value Strategy” fourth quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Small Cap Value Strategy outperformed the Russell 2000 Value Index, the Strategy’s benchmark, during the fourth quarter. On an absolute basis, the Strategy posted gains in nine of 11 sectors in which it was invested for the quarter. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
ClearBridge Investments Small Cap Value Strategy, in its Q4 2021 investor letter, mentioned Hillman Solutions Corp. (NASDAQ:HLMN) and discussed its stance on the firm. Founded in 1964, Hillman Solutions Corp. (NASDAQ:HLMN) is a Cincinnati, Ohio-based complete hardware solutions provider with a $2.2 billion market capitalization, and is currently spearheaded by its CEO, Douglas J. Cahill. Hillman Solutions Corp. (NASDAQ:HLMN) delivered a 7.35% return since the beginning of the year, while its 12-month returns are up by 15.28%. The stock closed at $11.56 per share on March 29, 2022.
Here is what ClearBridge Investments Small Cap Value Strategy has to say about Hillman Solutions Corp. (NASDAQ:HLMN) in its Q4 2021 investor letter:
“We completely agree with Ben Graham’s alleged assessment: “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.” In 2021 we observed votes being cast against companies based solely on how and when they raised capital, as if the choice of financing vehicle overrides the longterm value creation of the underlying business. The Initial Public Offerings Class of 2021 and companies that raised capital by merging with Special-Purpose Acquisition Companies (SPACs) were two such areas that detracted from the Strategy’s performance. Over time we trust that the value of each of the businesses underlying these holdings will be reflected as the “weighting machine” resumes operation. Of course, many IPOs and SPAC acquisitions were immature businesses — often just concepts — that shouldn’t be public, but with so many deals done, there are sure to be babies in that bathwater.
One such example is Hillman Solutions, which concluded the process of merging with Landcadia Holdings III (a SPAC) in mid2021. Hillman is a hardware distributor and provider of automation tools (for example, key making and knife sharpening) to retailers in the U.S. In the short term, supply chain issues have impacted the business while the treatment of SPAC-related warrants appears to have been a focus for bearish investors. In the long-term, Hillman is well-positioned to continue growing given the quality and labor alternative provided by its services. Despite a recent decline, Hillman’s fill rates (i.e., in-stock inventory) remain the highest in the industry, which should lead to market share gains and likely entry into additional product categories. Hillman’s business model, which includes taking over inventory, distribution and floor staffing, as well as solutions such as automated self-service kiosks, helps to address one of the main pressure points in its customers’ business: labor. Meanwhile the expectations for future growth and profitability discounted in Hillman’s current stock price are extremely modest relative to its potential.”
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Our calculations show that Hillman Solutions Corp. (NASDAQ:HLMN) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. Hillman Solutions Corp. (NASDAQ:HLMN) was in 20 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 25 funds in the previous quarter. Hillman Solutions Corp. (NASDAQ:HLMN) delivered a 8.97% return in the past 3 months.
In November 2021, we also shared another hedge fund’s views on Hillman Solutions Corp. (NASDAQ:HLMN) 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.
