Vulcan Value Partners, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. All five of the fund’s strategies trailed their respective benchmarks during the quarter. The good news is that across its portfolios most of its companies are performing well fundamentally. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Vulcan Value Partners mentioned Sleep Number Corporation (NASDAQ:SNBR) and explained its insights for the company. Founded in 1987, Sleep Number Corporation (NASDAQ:SNBR) is a Minneapolis, Minnesota-based accessories retail company with a $911.7 million market capitalization. Sleep Number Corporation (NASDAQ:SNBR) delivered a -45.81% return since the beginning of the year, while its 12-month returns are down by -57.39%. The stock closed at $41.51 per share on August 26, 2022.
Here is what Vulcan Value Partners has to say about Sleep Number Corporation (NASDAQ:SNBR) in its Q2 2022 investor letter:
“We purchased Sleep Number Corp. (NASDAQ:SNBR) during the quarter. Sleep Number is a manufacturer, retailer and the exclusive distributor of Sleep Number mattresses and related products. The company has a strong brand, a large installed base of consumers, and it is vertically integrated. Sleep Number has been gaining market share, and the company has a proven track record of pricing power as well as steadily increasing revenue per unit over time. Additionally, we believe the company is making intelligent capital allocation decisions.
For example, Sleep Number has repurchased half of its shares outstanding over the past six years. The recent negative macroeconomic environment has led to some concerns around the potential impact on the company during an economic downturn. Sleep Number has also experienced supply chain challenges including chip shortages for some of its smart beds and smart bases. In a recession, we expect Sleep Number’s revenue and margins will be negatively impacted.
However, we also believe underlying demand for the product exists and both revenue and margins will normalize over time. Supply chain and other macro concerns negatively impacted the stock price, giving us the opportunity to purchase Sleep Number. We believe Sleep Number is well positioned and the long-term outlook for the business is strong.”
Our calculations show that Sleep Number Corporation (NASDAQ:SNBR) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Sleep Number Corporation (NASDAQ:SNBR) was in 12 hedge fund portfolios at the end of the second quarter of 2022, compared to 14 funds in the previous quarter. Sleep Number Corporation (NASDAQ:SNBR) delivered a -14.20% return in the past 3 months.
In August 2021, we published an article that includes Sleep Number Corporation (NASDAQ:SNBR) in 5 Best Furniture Stocks to Buy Now. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
