Sound Shore Management, an investment management firm, has released its investor letter for the fourth quarter of 2023. A copy of the same can be downloaded here. The fund’s Investor Class (SSHFX) and Institutional Class (SSHVX) advanced 12.43% and 12.50%, respectively, in the fourth quarter of 2023, outperforming the Russell 1000 Value Index’s (Russell Value) 9.50% return. Sound Shore’s portfolio had a great year in 2023, returning 17.42% for SSHFX and 17.67% for SSHVX, both significantly ahead of the 11.46% return for the Russell Value. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Sound Shore Management featured stocks such as Vistra Corp. (NYSE:VST) in the fourth quarter 2023 investor letter. Headquartered in Irving, Texas, Vistra Corp. (NYSE:VST) is an integrated retail electricity and power generation company. On February 13, 2024, Vistra Corp. (NYSE:VST) stock closed at $44.20 per share. One-month return of Vistra Corp. (NYSE:VST) was 11.28%, and its shares gained 88.57% of their value over the last 52 weeks. Vistra Corp. (NYSE:VST) has a market capitalization of $15.804 billion.
Sound Shore Management made the following regarding Vistra Corp. (NYSE:VST) in its fourth quarter 2023 investor letter:
“For the year, we had a number of stocks up 50% or more and the list includes a diverse set of industries such as homebuilding, heavy truck manufacturing, and semiconductor capital equipment. We would like to highlight one outstanding contributor for the year, electricity generator and marketer Vistra Corp. (NYSE:VST), a low-cost provider with a healthy balance between generation and retail. Demand for electricity is growing and notably, load peaks are changing as well. As the country brings on more renewables and adjusts to greater demand later in the day due to increased use of electric heat pumps and electric car charging, reliable clean power is at a premium. Vistra is well positioned with diversified fuel sources including solar, natural gas, coal, nuclear and battery power storage facilities, along with a marketing division to manage price volatility. The company will soon be closing its accretive acquisition of merchant power generator, Energy Harbor, and the deal will make Vistra the second largest carbon free, nuclear electricity provider behind Constellation Energy, another portfolio holding. Vistra CEO Jim Burke, leads a veteran utility management team that is committed to transitioning the company’s portfolio to a sustainable footprint by closing older fossil fuel plants and increasing the renewables portfolio. They have also been an important voice to advocate for changes that will accelerate the global transition to a clean, renewable energy future, while maintaining adequate near-term supply. Vistra has a strong balance sheet that allows the company to invest in innovation and operational improvements. Additionally, management is using excess cash flow to buy 40% of the outstanding shares over a five year period and they are more than half way through that process. Currently valued at 9 times earnings with a 17% free cash flow yield and a 2.3% dividend, the stock remains a full position. As you can see from the chart below, Vistra’s performance was quite different than many other electricity providers and provides further evidence of the disparate performance that can often be found within a sector.”
A utility employee connecting wires at a power station in order to distribute electricity to customers.
Vistra Corp. (NYSE:VST) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 52 hedge fund portfolios held Vistra Corp. (NYSE:VST) at the end of third quarter which was 48 in the previous quarter.
We discussed Vistra Corp. (NYSE:VST) in another article and shared Legacy Ridge Capital Management’s views on the company. In addition, please check out our hedge fund investor letters Q4 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.
