Greenhaven Road Capital, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. The fund returned approximately -6% net for the third quarter, bringing YTD returns to approximately +14%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Greenhaven Road Capital, in its Q3 2021 investor letter, mentioned PAR Technology (NYSE: PAR) and discussed its stance on the firm. PAR Technology is a New Hartford, New York-based systems and service solutions provider with a $1.7 billion market capitalization. PAR delivered a 4.18% return since the beginning of the year, while its 12-month returns are up by 62.04%. The stock closed at $63.70 per share on November 2, 2021.
Here is what Greenhaven Road Capital has to say about PAR Technology in its Q3 2021 investor letter:
“PAR Technology continues to make progress towards moving quick-service restaurant chains to a cloud-based point of sale (POS) system, positioning itself to take advantage of all the opportunities that creates, such as integrating payments, inventory management, and loyalty program apps. The company raised capital during the quarter, which some may view as a negative, but I thought was incrementally quite positive. CEO Savneet Singh’s excellent capital allocation decisions are core to our PAR thesis. So far, every time that he has raised capital, he has made an acquisition. I look forward to seeing what he buys. The other positive development in Q3 was the announcement that PAR’s defense business won a large contract that they had been waiting on. This non-core, non-strategic asset greatly muddles company reporting, and I believe the announcement increases the likelihood that the defense business will be sold, simplifying the story and giving Savneet more capital to invest.”
Based on our calculations, PAR Technology (NYSE: PAR) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. PAR was in 17 hedge fund portfolios at the end of the first half of 2021, compared to 16 funds in the previous quarter. PAR Technology (NYSE: PAR) delivered a 9.44% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. Recently we came across a high-growth stock that has tons of hidden assets and is trading at an extremely cheap valuation. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.
Disclosure: None. This article is originally published at Insider Monkey.
