We recently compiled a list of the 10 Best Small-Cap Stocks to Buy Now According to Minerva Advisors. In this article, we are going to take a look at where The Eastern Company (NASDAQ:EML) stands against the other small-cap stocks.
Established in the fourth quarter of 2002, Minerva Advisors, based in Pennsylvania, is an activist hedge fund managed by David Cohen. The firm specializes in equity investments, concentrating on small-cap and micro-cap value companies listed in the United States. Minerva Advisors employs a variety of investment strategies, including long bias, market dislocation exploitation, event-driven approaches, long-short strategies, thrift conversions, merger arbitrage, and capital structure arbitrage. From time to time, David Cohen launches activist campaigns targeting small portfolio companies in which Minerva Advisors holds relatively large equity stakes. One such example is the newspaper publisher A. H. Belo which was trading at around $4 per share when the stock had $2.58 in net cash per share on its balance sheet as well as other assets with a combined value of more than $4, hence valuing the company’s publishing business at zero.
David P. Cohen holds dual roles as President and Chief Compliance Officer at Minerva Advisors LLC, where he manages investment portfolios and research activities. His expertise lies in investing in small-cap and micro-cap companies, both in the U.S. and internationally, focusing particularly on the industrial and financial sectors. Cohen is the sole managing member of Minerva.
Before his tenure at Minerva, Mr. Cohen founded and served as President of Athena Capital Management, Inc. from 1988 to 2011. Athena later merged with Minerva Advisors. His career began as a research analyst and portfolio manager at a Philadelphia-based investment partnership from 1984 to 1988. Beyond his professional roles, Cohen has extensive board experience. He has been a member of the board of directors at CampusWorks, Inc. since 2011 and previously served on the board of Penn-America Group, a publicly held insurance company, from 1993 to 1997. Cohen earned his undergraduate degree from Haverford College, grounding his career in a solid academic foundation.
Minerva Advisors manages nearly $300 million in discretionary assets, as reported in their Form ADV filed in March 2024. The fund serves 7 clients and recently disclosed holdings of $163 million in managed 13F securities for Q1 2024, with its top ten holdings making up 62.67% of the portfolio.
Our Methodology
The stocks discussed in this article are part of Minerva Advisors’ investment portfolio as of the first quarter of 2024. To provide readers with comprehensive insights into these companies, we’ve included analyst ratings and other pertinent details. Additionally, we highlight the number of hedge fund investors involved in each company. Why focus on the stocks that hedge funds invest in? Our research shows that mimicking the top picks of the best hedge funds can lead to market-beating returns. Our quarterly newsletter’s strategy, which selects 14 small-cap and large-cap stocks each quarter, has returned 275% since May 2014, outperforming its benchmark by 150 percentage points. (see more details here)
An aerial view of an industrial complex being stocked with engineered solutions.
The Eastern Company (NASDAQ:EML)
Number of Hedge Fund Holders: 7
At the end of the first quarter of 2024, Minerva Advisors reported owning 488,594 shares of The Eastern Company (NASDAQ:EML), worth $16,382,557. This investment constituted 10.03% of Minerva Advisors’ portfolio, according to regulatory filings.
According to an Investment Doctor analyst, despite the stock seeming overvalued based on its 2023 earnings and cash flow, The Eastern Company (NASDAQ:EML)’s dedication to reaching a 30% gross margin soon still makes it interesting. The analyst forecasts a 5% average revenue increase over the next three years, aiming for a 29% gross margin just below the targeted 30%. This could lift revenue to $316 million, with a gross profit of over $91 million (up from $65 million in 2023), and potentially increase pre-tax profit by $17 million and net income by $13 million.
Overall EML ranks 2nd on our list of the best small-cap stocks to buy. You can visit 10 Best Small-Cap Stocks to Buy Now According to Minerva Advisors to see the other small-cap stocks that are on hedge funds’ radar. While we acknowledge the potential of EML 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 more promising than EML but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.