Third Avenue Management, an investment management firm, published its “Value Fund” first quarter 2022 investor letter – a copy of which can be downloaded here. For the three months ended March 31st, 2022, the Third Avenue Value Fund (the “Fund”) returned 14.87%, compared to the MSCI World Index, which returned -5.04%.1 For further comparison, the MSCI World Value Index returned -0.48%2 during the quarter, outperforming the MSCI World Index by 4.56%. Over the trailing three-year period, the Fund’s total return has averaged approximately 14.93% per year Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Third Avenue Management Value Fund mentioned Ultrapar Participações S.A. (NYSE:UGP) and explained its insights into the company. Founded in 1937, Ultrapar Participações S.A. (NYSE:UGP) is a State of São Paulo, Brazil-based automotive fuel retailer with a $3.2 billion market capitalization. Ultrapar Participações S.A. (NYSE:UGP) delivered a 14.02% return since the beginning of the year, while its 12-month returns are down by -22.02%. The stock closed at $3.01 per share on April 21, 2022.
Here is what Third Avenue Management Value Fund has to say about Ultrapar Participações S.A. (NYSE:UGP) in its Q1 2022 investor letter:
“Ultrapar is a Brazilian fuel distribution and storage business. Operating under the Ipiranga brand name, Ultrapar is one of three companies with dominant fuel distribution networks in Brazil. With more than 7,000 service stations, Ipiranga holds an approximate 19% market share in Brazilian vehicle fuel distribution and also operates a related convenience store business under the AmPm brand. Ultrapar also operates one of Brazil’s largest Liquefied Petroleum Gas (“LPG”) distribution businesses as well as one of Brazil’s largest bulk liquids storage terminal networks. The Brazilian equity market has, in recent years been a relatively poor performer, particularly as measured in U.S. dollars. Ultrapar is one example of a relatively high quality Brazilian business that is currently available at valuation levels we haven’t seen in some time. Additionally, like many businesses in Brazil, the fuel distribution business has a few country-specific complexities. In the main, we would say that the overall direction of policy in Brazil has made operating the business more straightforward and the separation of several businesses in the energy storage and distribution arena from state-controlled Petrobras is gradually allowing the industry to operate in a more traditional arms-length manner. Further, as it relates to Ultrapar specifically, in recent years, it is generally accepted that Ipiranga has been the least well operated of the big three fuel distributors. This is most glaringly evidenced by routinely inferior fuel distribution margins. Ultrapar also spent years making ill-advised acquisitions in an attempt to diversify, a process which is currently being put into reverse. The disposition of several large but noncore businesses has led to a substantial cash inflow recently, putting Ultrapar on excellent footing to make operational improvements and, potentially, to make strategic additions to its business. This strategy will be executed by a new CEO, to whom Ultrapar’s controlling family has made a considerable financial commitment. We have high-regard for the new CEO, having familiarity with him from his previous career at Cosan S.A., another one of Brazil’s big three fuel distributors. In summary, we think that there is a lot of room for operational improvement as well as general valuation upside at Ultrapar.”
Photo by Zbynek Burival on Unsplash
Our calculations show that Ultrapar Participações S.A. (NYSE:UGP) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Ultrapar Participações S.A. (NYSE:UGP) was in 6 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 5 funds in the previous quarter. Ultrapar Participações S.A. (NYSE:UGP) delivered a 18.97% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
