The Mercator International Opportunity fund, an investment management company, published its second-quarter 2022 investor letter. A copy of the same can be downloaded here. The fund invests mainly in overseas companies that deliver long-term returns. Fund’s Class I Shares returned -29.07% and Class A Shares returned -29.10% in the second quarter. You can check the top 5 holdings of the fund to know its best picks in 2022.
In the letter, The Mercator International Opportunity Fund discussed stocks like Materialise NV (NASDAQ:MTLS). Headquartered in Leuven, Belgium, Materialise NV (NASDAQ:MTLS) engages in the business of 3D printing and software solutions. On August 19, 2022, Materialise NV (NASDAQ:MTLS) stock closed at $11.96 per share. One-month return of Materialise NV (NASDAQ:MTLS) was -14.51%, and its shares lost 42.78% of their value over the last 52 weeks. Materialise NV (NASDAQ:MTLS) has a market capitalization of $706.399 million.
Here’s how The Mercator International Opportunity Fund mentioned Materialise NV (NASDAQ:MTLS) in the Q2, 2022 investor letter:
“Belgian 3D printing software company Materialise NV (NASDAQ:MTLS) (2.09%) was a darling stock of the “transformative technology” bubble. Its stock price shot up from the low teens to near $80. It then crashed in sympathy with the COVID-19 tech selloff. Yet this volatility notwithstanding, nothing in the company’s business model or business expectations ever changed. If anything, the 3D printing industry has been gaining momentum. More and more applications in the aerospace, automotive and medical industries are driving a slow revolution in the additive manufacturing industry.
The Mercator Fund bought Materialise several years ago because of its GARP (Growth At a Reasonable Price) characteristics. It was indeed trading at a reasonable multiple of revenues before it shot up during the tech craze. We expected a steady yearly return in line with the company’s mid-teen growth rate. Instead, we saw our investment multiply in a very short period of time. That did not make sense and we exited the position near its all-time high.
The subsequent correction in MTLS was even more dramatic than its rally. The stock fell more than 70% in the blink of an eye. Just like that, the company was again valued reasonably. We started getting back in at around $20. By the end of last quarter, MTLS was trading back at $13 and at only 3 times revenues, down from 17 times. We added to the position as the stock got even cheaper. This is just one of many examples of the volatility investors have had to navigate. MTLS was among the stocks that clearly reached excessive valuations. A correction from such a level is understandable. However, we did not expect every growth stock to be washed away in sympathy with technology stocks, fundamentals and valuations be damned. A great many GARP stocks with low PEG (Price Earnings to Growth) ratios similarly became victims of the sudden loss of appetite for anything associated with growth.”
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Materialise NV (NASDAQ:MTLS) is not on the list of 30 Most Popular Stocks Among Hedge Funds. At the end of the first quarter, Materialise NV (NASDAQ:MTLS) was helped by 5 hedge funds compared to 7 in the previous quarter.
We discussed Materialise NV (NASDAQ:MTLS) in another article and shared the best 3D printing stocks to buy in August. You can check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other prominent investors.
Disclosure: None. This article is originally published at Insider Monkey.
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At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.
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