Merion Road Capital, an investment advisor, released its third-quarter 2023 investor letter. A copy of the same can be downloaded here. In the third quarter, Merion Road Small Cap Fund returned (3.1%) compared to a (5.2%) return for the Russell 2000 Index and (0.4%) for the Barclay Hedge Fund Index. Furthermore, MRCM Long Only Large Cap returned (2.6%) compared to a (3.2%) return for the S&P 500 Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Merion Road Capital highlighted stocks like Summit Materials, Inc. (NYSE:SUM) in the third quarter 2023 investor letter. Headquartered in Denver, Colorado, Summit Materials, Inc. (NYSE:SUM) is an integrated construction materials company. On October 20, 2023, Summit Materials, Inc. (NYSE:SUM) stock closed at $34.93 per share. One-month return of Summit Materials, Inc. (NYSE:SUM) was 15.39%, and its shares gained 39.64% of their value over the last 52 weeks. Summit Materials, Inc. (NYSE:SUM) has a market capitalization of $4.154 billion.
Merion Road Capital made the following comment about Summit Materials, Inc. (NYSE:SUM) in its Q3 2023 investor letter:
“During the quarter I established a new position in Summit Materials, Inc. (NYSE:SUM). SUM is a construction materials provider with about 40% of their revenue from aggregates and cement, 30% from ready-mix concrete, and the remaining from asphalt and paving. I have followed the aggregates and cement industry for many years and have always been attracted to it. What’s not to like given the lack of substitutes, limited competition due to permitting and transportation costs, and long-term demand growth. With the majority of product serving public construction needs, the industry should benefit from the recently passed infrastructure bills that have yet to truly hit the market.
In early September the company announced that they would acquire the U.S. operations of Cementos Argos, a Colombian cement company. The market did not like the transaction as SUM subsequently traded down over 20%. While this move was not entirely unwarranted, I thought it was excessive and used the sell-off to establish a position. To be fair, SUM paid up for the assets(10x EBITDA) and I wouldn’t be surprised if Argos had underinvested in them / they require additional capital. On the flip side, this acquisition will shift SUM’s business mix to the more stable and higher valued business lines of aggregates/cement. Furthermore, it increases the company’s exposure to growth states like Florida, the Carolina’s, and Georgia. Add in the potential of operational synergies and high-return capital investments, and this deal might not be so bad after all.”
A construction worker installing a garage door in a new residential home. Editorial photo for a financial news article. 8k. –ar 16:9
Summit Materials, Inc. (NYSE:SUM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Summit Materials, Inc. (NYSE:SUM) at the end of second quarter which was 18 in the previous quarter. In addition, please check out our hedge fund investor letters Q3 2023 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.
