Voss Capital, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. In Q4 2021, the Voss Value Fund, LP and the Voss Value Offshore Fund, Ltd., returned +13.6% and +14.3% to investors net of fees and expenses, respectively, compared to +2.1% total return for the Russell 2000, +3.9% price return for the Russell 2000 Value, and +11.0% total return for the S&P 500. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Voss Capital, in its Q4 2021 investor letter, mentioned Olin Corporation (NYSE:OLN) and discussed its stance on the firm. Founded in 1892, Olin Corporation (NYSE:OLN) is a Clayton, Missouri-based chemical products, and ammunition manufacturer with an $8.3 billion market capitalization, and is currently spearheaded by its CEO, Scott M. Sutton. Olin Corporation (NYSE:OLN) delivered a -6.45% return since the beginning of the year, while its 12-month returns are up by 49.85%. The stock closed at $53.81 per share on March 22, 2022.
Here is what Voss Capital has to say about Olin Corporation (NYSE:OLN) in its Q4 2021 investor letter:
“Olin is a multi-segment business, with two segments in the chemicals industry (chlorine, caustic soda, and epoxy production) and a small segment in the ammunition industry. Unlike many chemical companies, we believe Olin has a few idiosyncratic catalysts that can potentially make the stock a core-sized position for us.
First, we believe the company has an underappreciated moat as the low-cost chlorine producer in North America. New CEO Scott Sutton has started to leverage that moat in the form of contract renegotiation and supply constraint (e.g., shutting down unproductive plants) to maximize the value of producing and storing a toxic gas like chlorine. Our current understanding is that incremental demand for both chlorine and caustic soda is set to significantly outstrip incremental supply and that any incremental supply will take years to build out and come online. We think OLN’s other chemical business, Epoxy, is in a similar position with a 5-to-7-year runway of low-cost production leadership, at scale, that will allow for substantial margin expansion. Additionally, a sale of the ammunition business could unlock significant added value – opening the door for investors interested in a chemical pure-play and concerned about ESG. Finally, a full 30% of the company’s chlorine production goes to Dow Chemical in the form of a very low-value, long-term contract that expires in 2025, something the CEO has suggested could be amended well before 2025, in a “cash accretive” way…” (Click here to see the full text)
Tonhom1009/Shutterstock.com
Our calculations show that Olin Corporation (NYSE:OLN) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. Olin Corporation (NYSE:OLN) was in 46 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 43 funds in the previous quarter. Olin Corporation (NYSE:OLN) delivered a -3.64% return in the past 3 months.
In March 2022, we published an article that includes Olin Corporation (NYSE:OLN) in the 10 Stocks to Buy Today According to Jed Nussdorf’s Soapstone Capital. You can find more than 100 investor 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.
