Greenhaven Road Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. Greenhaven’s estimated returns for the third quarter totaled approximately +50% net of fees and expenses. August was the best month in the partnership history. The net result is that both funds are up around 55% for the year, comparing favorably to the Russell 2000, which ended September down -8.7% year to date. You should check out Greenhaven Road Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In the said letter, Greenhaven Road Capital highlighted a few stocks and Par Technology Corp (NYSE:PAR) is one of them. Par Technology Corp (NYSE:PAR) is a provider of systems and service solutions for the hospitality industry. Year-to-date, Par Technology Corp (NYSE:PAR) stock gained 28.9% and on November 3rd it had a closing price of $39.63. Here is what Greenhaven Road Capital said:
“PAR Technology (PAR) – PAR’s modern restaurant point-of-sale system (POS), which enables integration with delivery platforms such as Uber Eats and online ordering, became more valuable during the pandemic. Their customers, the larger quick service restaurants (e.g., Dairy Queen), have remained profitable during the periods of reduced seating capacity in restaurants. PAR is a counterintuitive COVID beneficiary. The company should see improved growth metrics as businesses “open up” and their employees re-enter for installations and training. PAR is also just launching their payments module. For many POS systems, the payments profit opportunity is 2X-3X their core software opportunity. Penetration will be very low initially, but it could be a significant contributor in the coming years. Finally, before the end of the year, it is very likely that PAR will divest its defense business. It is not a core business at this point. The divestiture will provide $80M+ of capital to invest in the POS business or for an acquisition. The sale will simplify the PAR story and make it much more of a pure play. We have the opportunity for growth and multiple expansion here with a very talented CEO.
I have always respected PAR CEO Savneet Singh, who is an A player in my book. He has experienced the technology sector as an investor and operator, and has an outstanding network. From my position as a member of the SharpSpring board of directors, I reached out to Savneet to see if he had any recommendations of people in his network when it became clear that we needed to add a new director. To my pleasant surprise, he indicated that he himself might be interested as a way to stay tapped into the industry outside of the technology/restaurant-centric world he was currently operating in. After a series of approvals, Savneet joined the SharpSpring board this summer. Every interaction has reinforced my view that he is an A-Player and has an excellent chance of creating real value wherever he goes.
At the end of September, PAR issued equity and sold more than $120M of shares. Given that the company was sitting on $38M in cash, it seemed like an odd decision to some, and PAR’s share price declined by more than 15% over two days. I believe that the issuance of shares precedes a large acquisition, and I am very excited to see how Savneet puts the capital to work. PAR is on a multi-year journey. Not too long ago, it was an undercapitalized business with a very attractive software asset buried inside and the wrong management team to nurture it. A lot of foundational work has been put in place to fix the balance sheet, fix the technology, and fix the team. There is a long runway with a lot of opportunity here and an excellent jockey.”
In September, we published an article revealing Greenhaven Road Capital bullish investment thesis on Par Technology Corp (NYSE:PAR) stock in its Q2 2019 investor letter. This suggests that the investment firm has been bullish for a long time on Par Technology Corp (NYSE:PAR).
In Q1 2020, the number of bullish hedge fund positions on Par Technology Corp (NYSE:PAR) stock decreased by about 33% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in PAR’s growth potential. Our calculations showed that Par Technology Corp (NYSE:PAR) 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 scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:
Disclosure: None. This article is originally published at Insider Monkey.
