Greenhaven Road Capital, an investment management company, released its second quarter 2023 investor letter. A copy of the same can be downloaded here. In the second quarter, the Fund returned 8% net, bringing YTD net returns to over 25%. The firm believes its portfolio is a little stronger with each passing day despite the challenges. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Greenhaven Road Capital highlighted stocks like Barnes & Noble Education, Inc. (NYSE:BNED) in the second quarter 2023 investor letter. Headquartered in Basking Ridge, New Jersey, Barnes & Noble Education, Inc. (NYSE:BNED) manages and operates bookstore chains in universities. On August 11, 2023, Barnes & Noble Education, Inc. (NYSE:BNED) stock closed at $1.6400 per share. One-month return of Barnes & Noble Education, Inc. (NYSE:BNED) was 3.14%, and its shares lost 43.64% of their value over the last 52 weeks. Barnes & Noble Education, Inc. (NYSE:BNED) has a market capitalization of $86.271 million.
Greenhaven Road Capital made the following comment about Barnes & Noble Education, Inc. (NYSE:BNED) in its second quarter 2023 investor letter:
“Barnes & Noble Education, Inc. (NYSE:BNED) runs bookstores in partnership with colleges. They are going through a business transformation to a model they call First Day Complete – a partnership with the colleges where all course books are billed through the school for a flat fee per student. For schools that have transitioned, BNED revenue increases by 90% and gross profits grow by 130%. This fall, the number of First Day Complete schools will grow by more than 50% but the total will still be less than 25% of the overall schools.
In the last letter, I wrote that, “as best as I can tell, the number of people modeling the company’s economics if they are successful with the First Day Complete transition is tiny.” To my knowledge, it was three people consisting of an activist who then joined the Board, and two investors I found on Twitter using pseudonyms. In an effort to both grow the number of people trying to model this nanocap and to check my assumptions, I tweeted that I was starting a Barnes & Noble Education modeling group. It has been surprisingly productive. The number of people who have actually modeled the company has multiplied.
I remain convinced that there is a legitimate path to well over $100M per year in EBITDA for this sub-$70M market cap company. This coming year will be a challenge since not enough schools have transitioned to First Day Complete and there is debt to be refinanced, but I see a path to an 8-10X return from here if the debt gets restructured, allowing the equity holders to realize the benefits of First Day Complete. Each passing day we are a day closer to the First Day Complete transition and a properly capitalized business.”
Pixabay/Public Domain
Barnes & Noble Education, Inc. (NYSE:BNED) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 11 hedge fund portfolios held Barnes & Noble Education, Inc. (NYSE:BNED) at the end of first quarter which was 12 in the previous quarter.
We discussed Barnes & Noble Education, Inc. (NYSE:BNED) in another article and shared Greenhaven Road Capital’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 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.
