Voss Capital, an investment management company, released its third-quarter 2022 investor letter. A copy of the same can be downloaded here. Voss Capital’s funds, Voss Value Fund, LP, and the Voss Value Offshore Fund, Ltd returned +1.7% and +1.3%, respectively, in the third quarter compared to a -2.2% return for the Russell 2000 index, -4.6% return for the Russell 2000 Value Index, and -4.9% return for the S&P 500 Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Voss Capital highlighted stocks like Extreme Networks, Inc. (NASDAQ:EXTR) in the Q3 2022 investor letter. Headquartered in Morrisville, North Carolina, Extreme Networks, Inc. (NASDAQ:EXTR) is a networking solutions provider. On December 7, 2022, Extreme Networks, Inc. (NASDAQ:EXTR) stock closed at $19.55 per share. One-month return of Extreme Networks, Inc. (NASDAQ:EXTR) was 6.71%, and its shares gained 35.86% of their value over the last 52 weeks. Extreme Networks, Inc. (NASDAQ:EXTR) has a market capitalization of $2.568 billion.
Voss Capital made the following comment about Extreme Networks, Inc. (NASDAQ:EXTR) in its Q3 2022 investor letter:
“Extreme Networks, Inc. (NASDAQ:EXTR) is one of our core longs that is a beneficiary from the ongoing, multiyear boom in enterprise Capex, as companies and government agencies continue to invest in modernizing their networks for the Cloud era. In the latest quarter (Q1 Fiscal Year 2023) they showed progress on expanding gross margins, further grew their product backlog (now more than 20x above historical average), and showed what we see as an impressive reacceleration of software cloud bookings growth to +60%. Management recently reiterated their aggressive long-term target of a 40% cloud CAGR for the next three years (above our Base Case numbers), no small feat given the business has now scaled to over $100 million in annual recurring revenue. Management is now talking more about Fiscal Year 2026 and building up that year’s order book, given the high visibility they have into 2023-2025. Ongoing order growth and pipelines remain strong (even in Europe), defying all consensus sell side expectations of a sudden demand collapse. We’ve maintained an outsized long position in EXTR because of the tremendous growth visibility their hardware backlog provides, along with the software and services revenue that will come with it.
Our estimates for 2023-2025 remain well above consensus expectations and as a result, we see our Bull Case, which has 115% upside based on 15x FY2024 FCF, growing in likelihood. We think this will prove a reasonable target once more investors realize they are hitting their operational groove and estimates revisions will be positive, they are steadily taking market share, and they have underappreciated upside optionality as a strategic acquisition.”
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Extreme Networks, Inc. (NASDAQ:EXTR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Extreme Networks, Inc. (NASDAQ:EXTR) at the end of the third quarter, which was 20 in the previous quarter.
We discussed Extreme Networks, Inc. (NASDAQ:EXTR) in another article and shared the list of stocks that can crash after the Federal Reserve’s latest rate hike. In addition, please check out our hedge fund investor letters Q3 2022 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.
