Greystone Capital Management, an investment management company, released its fourth-quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the return of different accounts managed by the firm ranged from +5.0% to +19.9% compared to +7.5% and +6.2% returns for the S&P 500 and the Russell 2000 Index, respectively. The median account return for 2022, was -29.3%, net of fees. In addition, please check the fund’s top five holdings to know its best picks in 2022.
Greystone Capital Management highlighted stocks APi Group Corporation (NYSE:APG) in the Q4 2022 investor letter. Headquartered in New Brighton, Minnesota, APi Group Corporation (NYSE:APG) is a safety, specialty, and industrial services provider. On February 3, 2023, APi Group Corporation (NYSE:APG) stock closed at $22.30 per share. One-month return of APi Group Corporation (NYSE:APG) was 17.68%, and its shares gained 4.01% of their value over the last 52 weeks. APi Group Corporation (NYSE:APG) has a market capitalization of $5.216 billion.
Greystone Capital Management made the following comment about APi Group Corporation (NYSE:APG) in its Q4 2022 investor letter:
“During the quarter we re-entered into a position in APi Group Corporation (NYSE:APG), a leading fire safety service and inspection business focused on commercial end markets. We previously owned APi shortly after its SPAC IPO when I thought shares were severely mispriced given the strength of the business and future earnings power. We sold the position following a strong increase in price within a short period of time, and now find ourselves owners again. Since our initial ownership, earnings power has increased considerably as the company completed the acquisition of Chubb’s fire and security business from Carrier Global, while continuing to execute tremendously well. Yet we had the opportunity to acquire shares at nearly the same price we were granted the first time around.
APG provides an incredibly necessary and recession resilient services where they have been able to gain a clear advantage through organic growth as well as M&A where decades of management experience allows them to acquire and improve complementary businesses. I believe APG has massive advantages from a scale, culture, pricing and work quality standpoints, to the point where they have very little national competition. As the business grows, they will continue to separate themselves as the premier provider of fire safety services, and should be able to flex some pricing power in exchange for quality. Importantly, APG has diversified the business away from new construction activity, so they are more insulated from industry downturns than in the past.
Organic growth and slight margin expansion is all that’s needed to do very well owning this business, as I estimate APG can generate EBITDA in excess of $1.0 billion within the next few years on an enterprise value of less than $7.0 billion. Management is targeting a free cash flow conversion rate of 80% which I believe is achievable using conservative estimates, and would provide firepower for strong capital allocation, an area in which management excels. If APG turns on the M&A and share repurchase engines, the potential return math becomes even more attractive. My commentary from 2020 on the quality of the business and investment thesis remains applicable, and I believe the path to strong returns is more than likely from here. I look forward to sharing more about APG in future letters.”
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APi Group Corporation (NYSE:APG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held APi Group Corporation (NYSE:APG) at the end of the third quarter which was 29 in the previous quarter.
We discussed APi Group Corporation (NYSE:APG) in another article and shared 1 Main Capital’s views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
