Merion Road Capital, an investment advisor, released its first quarter 2024 investor letter. A copy of the letter can be downloaded here. In the first quarter, Merion Road Small Cap Fund returned 4.9% compared to 5.0% for the Russell 2000 Index. The long-only portfolio of Merion Road rose 12.9% during the quarter compared to a 10.4% return for the S&P 500 Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Merion Road Capital featured stocks like Clean Harbors, Inc. (NYSE:CLH) in the first quarter 2024 investor letter. Headquartered in Norwell, Massachusetts, Clean Harbors, Inc. (NYSE:CLH) provides environmental and industrial services. On April 17, 2024, Clean Harbors, Inc. (NYSE:CLH) stock closed at $191.78 per share. One-month return of Clean Harbors, Inc. (NYSE:CLH) was -1.57% and its shares gained 33.25% of their value over the last 52 weeks. Clean Harbors, Inc. (NYSE:CLH) has a market capitalization of $10.478 billion.
Merion Road Capital stated the following regarding Clean Harbors, Inc. (NYSE:CLH) in its first quarter 2024 investor letter:
“During the quarter I uncharacteristically built a position from nothing into our top holding. Clean Harbors, Inc. (NYSE:CLH) is the largest US hazardous waste management company. Before digging into CLH I would like to diverge with a bit of personal history. In my early 20’s I worked at Macquarie Bank where our team was responsible for acquiring investments on behalf of our managed infrastructure funds and the bank’s balance sheets. One of my first assignments was the acquisition of a publicly traded municipal solid waste (MSW) management company (Waste Industries). While not technically infrastructure per-se, MSW has similar characteristics like being an essential service, operating regional monopolies, and controlling scarce assets. In any case we paid something like 8-9x EBITDA which was a premium to the then trading multiple. Waste Industries is now a small part of GFL Environmental which trades at 12x EBITDA. And GFL is actually at a notable discount to its peers of Waste Management, Republic Services, and Waste Connectionsthat are at 15x. While hindsight is 20/20, buying into this asset class 15 years ago would have been a home-run given their strong cashflow and multiple expansion.
While hazardous waste is not entirely comparable to their MSW brethren, CLH has many attractive attributes. They own and operate scarce assets including nine incinerators and eight landfills where new supply is limited by a complex permitting process and significant construction cost. They maintain vertically integrated operations that allow it to control waste from collection through transportation and disposal; this activity similarly requires specialized permits for which the company maintains over 500. As the largest player in the space, CLH has a proven history of managing waste properly – a key consideration amongst customers given environmental ramifications. They also have scale benefits that include route-based efficiencies, capacity utilization, and the deepest breadth of service offering…” (Click here to read the full text)
A truck filled with hazardous waste being safely unloaded at a recycling facility.
Clean Harbors, Inc. (NYSE:CLH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Clean Harbors, Inc. (NYSE:CLH) was held by 32 hedge fund portfolios, compared to 24 in the previous quarter, according to our database.
We previously discussed Clean Harbors, Inc. (NYSE:CLH) in another article, where we shared the list of biggest waste management companies in the worldy. In addition, please check out our hedge fund investor letters Q1 2024 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.