Miller Value Partners, an investment management firm, published its “Deep Value Strategy” first quarter 2022 investor letter – a copy of which can be downloaded here. After a challenging back half of 2021, where the portfolio experienced significant valuation compression, the Deep Value Strategy bounced back and has had a strong start to the year. For the quarter, the Deep Value Strategy was up more than 30%, significantly ahead of the S&P 1500 Value Index and the overall market. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Miller Value Partners Deep Value Strategy mentioned TechnipFMC plc (NYSE:FTI) and explained its insights for the company. Founded in 2017, TechnipFMC plc (NYSE:FTI) is a Houston, Texas-based global oil and gas company with a $3.3 billion market capitalization. TechnipFMC plc (NYSE:FTI) delivered a 24.49% return since the beginning of the year, while its 12-month returns are down by -10.23%. The stock closed at $7.37 per share on May 13, 2022.
Here is what Miller Value Partners Deep Value Strategy has to say about TechnipFMC plc (NYSE:FTI) in its Q1 2022 investor letter:
“During the quarter, larger new holdings includes TechnipFMC (NYSE:FTI). TechnipFMC is an energy service provider, a global leader in subsea, offshore and surface projects. The company is known for its technology and innovation leadership within the subsea market. During the multi-year protracted downturn, TechnipFMC focused on building differentiated integrated system solutions for their clients that cover the full life cycle from conceptual design to project execution and finally life of field/maintenance. Their underwater solutions (pre-engineered modular architectures) significantly differentiate the company from its peers and has potential to industrialize the subsea market. In addition, TechnipFMC is well positioned to benefit from the Energy Transition (Offshore floating renewables, GHG removal, and Hydrogen). The enhancements to the company’s offerings and manufacturing footprint are expected to drive efficiencies and double profits over the next couple of years, and free cash flow conversion should show nice improvement as well. TechnipFMC has a strong balance sheet with more than $1.3B in cash and improving debt leverage. With a strong upcycle started for subsea (growing backlog orders) there is potential for considerable share price upside and greater return to shareholders over the next couple of years. The auto industry has some similarities to the energy sector two years ago – significantly out of favor with a growing imbalance between supply and future demand. As the industry sees a transition to electric vehicles (EVs), the marketplace has created a significant wide valuation spread between industry participants. As we previously discussed with our investment in Tenneco, the auto suppliers have been adversely impacted first by the initial Covid outbreak and then by the supply chain challenges that became more visible during last summer. Industry inventory levels remain near all-time lows at 20 days versus at 60-80 days between 2015-2020. There is the potential for a significant replenishment cycle over the coming years.”
Our calculations show that TechnipFMC plc (NYSE:FTI) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. TechnipFMC plc (NYSE:FTI) was in 25 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 28 funds in the previous quarter. TechnipFMC plc (NYSE:FTI) delivered a 7.28% return in the past 3 months.
In March 2022, we published an article that includes TechnipFMC plc (NYSE:FTI) in 10 Energy Stocks to Buy Today According to Richard S. Pzena’s Hedge Fund. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
