Mittleman Brothers recently released its Q1 2020 Investor Letter, a copy of which you can download here. The Mittleman Global Value Equity Fund – Class P declined 33.4% in AUD (net of fees) in the first quarter of 2020, underperforming the MSCI ACW Total Return Index by 23.7%. You should check out Mittleman Brothers top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.
In the said letter, Mittleman Brothers highlighted a few stocks and Revlon Inc (NYSE:REV) is one of them. Revlon is a multinational cosmetics, skin care, fragrance, and personal care company. Year-to-date, Revlon Inc (NYSE:REV) stock lost 53.1% and on June 24th it had a closing price of $9.99. Here is what Mittleman Brothers said:
“The 2nd largest detractor in Q1 was Revlon, and understandably so, as an overleveraged company saw its sector endure a ~20% sales hit in Q1 2019 due to COVID-19. This robbed the category of its usually defensive nature which was manifest in all prior recessions.
The stock has begun rebounding somewhat in Q2 2020 as it appears to be successfully refinancing near-term debts. MIM has lowered its fair value target from $38 to $31 on higher debt due to the recent cash burn. The “bank” of billionaire Ron Perelman (87% shareholder), which has not been tapped in this crisis (but was helpful in the early 2000s), or just the perception of it being there provides unusual support to the equity and the entire capital structure during tough times like now.
Revlon’s mass market positioning (except for the 20% of sales from prestige brand Elizabeth Arden) should play to the trade-down effect that tends to support mass market brands much better than prestige brands during recessions. Revlon will likely sell its hair colour business (#1 market share in mass market), its fragrance business or Elizabeth Arden for valuations high enough to facilitate substantial deleveraging of its balance sheet.”
In Q1 2020, the number of bullish hedge fund positions on Revlon Inc (NYSE:REV) stock decreased by about 5% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Revlon’s downside potential. Our calculations showed that Revlon Inc (NYSE:REV) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.
