Investment management company Maran Capital Management recently released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. Maran Partners Fund returned +1.0% net of all fees and expenses in the third quarter, which makes the yearly returns +9.0% net. The partnership compounded at a rate greater than 14% annually net, over the past five years, just slightly less than a “five-year double.” In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Maran Capital Management highlighted stocks like Clarus Corporation (NASDAQ:CLAR), in the third quarter 2024 investor letter. Clarus Corporation (NASDAQ:CLAR) develops and manufactures outdoor equipment and lifestyle products. The one-month return of Clarus Corporation (NASDAQ:CLAR) was 0.45%, and its shares lost 23.45% of their value over the last 52 weeks. On November 4, 2024, Clarus Corporation (NASDAQ:CLAR) stock closed at $4.44 per share with a market capitalization of $170.328 million.
Maran Capital Management stated the following regarding Clarus Corporation (NASDAQ:CLAR) in its Q3 2024 investor letter:
“I believe the private market approach that I discussed above provides a useful alternative perspective on Clarus Corporation (NASDAQ:CLAR). Through this lens, we would acknowledge that this is a challenging year for Clarus: the outdoor industry is weak as it moves past a Covid-related pull-forward of demand. But we would also reflect on the fact that Clarus has a large cash balance and no debt. It should generate additional free cash flow this year. Its brands remain strong and are being positioned to reaccelerate in the coming years. Ultimately, I believe the private value of Clarus’s brands is significantly higher than where the stock is currently trading in the public market.
Clarus’ enterprise value (based on the estimated year-end cash balance) as this letter goes to print is just under $100 million. Clarus recently sold its bullet and ammunition business for $175 million. If it put its remaining two businesses up for sale, it’s hard to know exactly where the bids might come in, but I think reasonable people would conclude that each business (Black Diamond Equipment and Rhino Rack/MAXTRAX) might be worth between $150 million and $250 million. In total, Clarus owns brands that would probably sell in private transactions for a total of $300 to $500 million. Given the challenging environment, bids might come in at the low end of this range if Clarus were to sell in the near-term. If the businesses were generating $40 – $50 million of EBITDA in a year or two, then perhaps the higher end of the range would be in play…” (Click here to read the full text)
A hiker in a forest with a backpack of outdoor equipment highlighting the company’s lifestyle products.
Clarus Corporation (NASDAQ:CLAR) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held Clarus Corporation (NASDAQ:CLAR) at the end of the second quarter which was 13 in the previous quarter. Clarus Corporation’s (NASDAQ:CLAR) second-quarter revenue of $56.5 million, fell short of its projected range of $58 million to $62 million. However, the company’s first-half 2024 revenue of $125.8 million remains aligned with its initial forecast of $125 million. While we acknowledge the potential of Clarus Corporation (NASDAQ:CLAR) 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 another article, we discussed Clarus Corporation (NASDAQ:CLAR) and shared Maran Capital Management’s views on the company. In addition, please check out our hedge fund investor letters Q3 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.