Miller Value Partners, an investment management company, released its “Opportunity Equity Strategy” first-quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the Opportunity Equity Strategy was up 9.84% net of fees compared to a 7.5% return for the S&P 500 Index and a 6.67% return for the S&P 1500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Miller Value Opportunity Equity Strategy highlighted stocks like UBS Group AG (NYSE:UBS) in the first quarter 2023 investor letter. Headquartered in Zurich, Switzerland, UBS Group AG (NYSE:UBS) provides financial management solutions. On April 20, 2023, UBS Group AG (NYSE:UBS) stock closed at $20.36 per share. One-month return of UBS Group AG (NYSE:UBS) was 7.21%, and its shares gained 17.82% of their value over the last 52 weeks. UBS Group AG (NYSE:UBS) has a market capitalization of $63.273 billion.
Miller Value Opportunity Equity Strategy made the following comment about UBS Group AG (NYSE:UBS) in its Q1 2023 investor letter:
“We did find one opportunity irresistible. We initiated a new position in UBS Group AG (NYSE:UBS) (UBS $20.79). UBS was well-positioned enough to be the anointed savior of the failed Credit Suisse. We think UBS got a sweetheart deal. We aren’t alone. JP Morgan penned a recent piece titled, “Transformative deal creating a Wealth Management powerhouse.”
The Financial Times reported that Credit Suisse’s Swiss bank alone was worth 3x the price paid. UBS guided for pro forma tangible book value of over $28 per share implying it’s trading at 0.7x tangible book value. This is cheaper than all but the most troubled regional banks.
The integration will be messy and prolonged, which is enough to deter most investors. Longer-term, we think business fundamentals will be greatly improved (unlike regional banks who likely face increased regulatory pressure). Scale will increase and business mix will shift towards asset management. Both should improve returns on equity. We think UBS should be able to earn over $4 per share in a few years, with a mid-to-high teens return on tangible equity. We think the stock should double over that horizon.
Overall, we remain confident about the portfolio and its prospects. The portfolio mostly consists of opportunities like Expedia and UBS: companies where we see strong fundamentals and cash flow where the market doesn’t accurately reflect the long-term prospects. We have confidence the portfolio can withstand any short-term challenges and deliver strong long-term returns.”
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UBS Group AG (NYSE:UBS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 16 hedge fund portfolios held UBS Group AG (NYSE:UBS) at the end of the fourth quarter which was 12 in the previous quarter.
We discussed UBS Group AG (NYSE:UBS) in another article and shared the list of biggest mutual fund companies in the world. F. In addition, please check out our hedge fund investor letters Q1 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.
