Kingdom Capital Advisors, a private investment firm, released its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. Kingdom Capital Advisors is in its third year of operation as of the end of 2024. Since the firm’s inception, small cap stocks, as determined by the Russell 2000 TR, have experienced a cumulative return of roughly 7%, while KCA has experienced an 89% return. The strategy returned 2.07% (net of fees) in the fourth quarter compared to 0.33%, 2.41%, and 4.93% returns for the Russell 2000 TR, S&P 500 Index TR, and the NASDAQ 100 TR, respectively. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Kingdom Capital Advisors emphasized stocks such as Magnera Corporation (NYSE:MAGN). Magnera Corporation (NYSE:MAGN) manufactures and distributes non-woven and related products primarily into healthcare, personal care, and infection prevention. The one-month return Magnera Corporation (NYSE:MAGN) was -11.34%, and its shares lost 20.51% of their value over the last 52 weeks. On March 21, 2025, Magnera Corporation (NYSE:MAGN) stock closed at $18.60 per share with a market capitalization of $658.44 million.
Kingdom Capital Advisors stated the following regarding Magnera Corporation (NYSE:MAGN) in its Q4 2024 investor letter:
“Our most significant addition in Q4 was Magnera Corporation (NYSE:MAGN). The product of a merger between Glatfelter and Berry’s HH&S businesses, Magnera began trading independently in November. The combined entity should file their 10-K shortly and report their Q1 in February, after which we expect the improvement in volumes for their non-wovens will become apparent. This is not an exciting business, producing products like wipes, diapers, etc. Magnera was spun with a significant amount of debt, but we interpret their upsized $800m notes offering as a sign that the business is turning. The debt is cheap, termed out, and backed by significant assets. We expect Management to focus on deleveraging quickly. As a bonus, some of their business lines were impacted by cheap imports in recent years, and I expect Magnera could be a beneficiary of a tougher tariff regime. At a high level, here is our investment framework: • Magenra should have about $1.8B of net debt after the spin, and 36m outstanding shares, with about $400m of EBITDA. Shares currently trade at $18. • I think Magnera can generate >$100m of annual FCF for the next three years, while growing EBITDA to $475-500m via synergies and volume recovery. These businesses have averaged over $500m of annual EBITDA in the past decade, suggesting this normalization is not overly aggressive. • At their current 6x EBITDA multiple, that would imply the business trades for $40/share within three years (~120% upside/30% IRR).”
A close up of a researcher in a laboratory, examining a new biopharmaceutical drug used to treat resistant bacterial infections.
Magnera Corporation (NYSE:MAGN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held Magnera Corporation (NYSE:MAGN) at the end of the fourth quarter which was 16 in the previous quarter. MWhile we acknowledge the potential of Magnera Corporation (NYSE:MAGN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In addition, please check out our hedge fund investor letters Q4 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.