Steel City Capital, an investment management company, released its third-quarter 2022 investor letter. A copy of the same can be downloaded here. In the third quarter, the fund declined 7.9% net of fees and expenses. For the nine months in 2022, the fund fell 18.2%, net of fees and expenses. Most of the fund’s decline in the quarter happened in August, as some of the fund’s short positions rallied against the fund in the month. For more information on the fund’s top picks in 2022, please check its top five holdings.
Steel City Capital highlighted stocks like Carvana Co. (NYSE:CVNA) in the Q3 2022 investor letter. Headquartered in Tempe, Arizona, Carvana Co. (NYSE:CVNA) is an e-commerce platform provider. On November 11, 2022, Carvana Co. (NYSE:CVNA) stock closed at $11.88 per share. One-month return of Carvana Co. (NYSE:CVNA) was -30.695% and its shares lost 95.97% of their value over the last 52 weeks. Carvana Co. (NYSE:CVNA) has a market capitalization of $2.11 billion.
Steel City Capital made the following comment about Carvana Co. (NYSE:CVNA) in its Q3 2022 investor letter:
“As I write, Carvana Co. (NYSE:CVNA), a long-time short, is circling the drain. After reporting earnings, shares have been roughly cut in half while the company’s bonds are now priced anywhere from 35- to 45-cents on the dollar, with yields ranging from 25% to 40%. While the shares already experienced a steep decline during the past year, the postearnings sell-off appears to reflect investors finally acknowledging the company’s near-term liquidity issues. Raising capital – debt or equity – seems unlikely, if not impossible. Bulls had been holding on to the hope CVNA would meet its stated “goal” of generating “significantly positive EBITDA in FY 2023,” but management walked back that aspiration last week. I always thought the word “goal” reflected squishy language that never carried the same weight as “guidance” and drew conclusions accordingly. The difference is much the same as me telling my wife I have a “goal” of having washboard abs vs. “guidance” that I will have them by swimsuit season. The language was deliberate (and probably highly lawyered), and in my estimation, reflected an effort to give bulls something to cling on to without the company exposing itself to a lawsuit when they (inevitably) missed.”
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Carvana Co. (NYSE:CVNA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held Carvana Co. (NYSE:CVNA) at the end of the second quarter, which was 48 in the previous quarter.
We discussed Carvana Co. (NYSE:CVNA) in another article and shared the the best meme stocks to buy. In addition, please check out our hedge fund investor letters Q3 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.
