SRK Capital, an investment management firm, released its fourth quarter 2023 investor letter. A copy of the same can be downloaded here. In 2023, the SRK Fund appreciated 17.15% while the S&P 500 and the Russell 2000 appreciated 26.29% and 16.93%, respectively. The fund increased 869.94% compared to 98.88% and 41.75% for the indexes respectively. The Fund underperformed the S&P 500 for the first time in 2023. In addition, please check the fund’s top five holdings to know its best picks in 2023.
SRK Capital featured stocks such as SigmaTron International, Inc. (NASDAQ:SGMA) in the fourth quarter 2023 investor letter. Headquartered in Elk Grove Village, Illinois, SigmaTron International, Inc. (NASDAQ:SGMA) is an independent provider of electronic manufacturing services (EMS). On February 20, 2024, SigmaTron International, Inc. (NASDAQ:SGMA) stock closed at $3.45 per share. One-month return of SigmaTron International, Inc. (NASDAQ:SGMA) was 7.48%, and its shares lost 11.54% of their value over the last 52 weeks. SigmaTron International, Inc. (NASDAQ:SGMA) has a market capitalization of $21.025 million.
SRK Capital stated the following regarding SigmaTron International, Inc. (NASDAQ:SGMA) in its fourth quarter 2023 investor letter:
“SigmaTron International, Inc. (NASDAQ:SGMA) is a provider of electronic manufacturing services that was added as a holding during the first half of the year. As a contract manufacturer, Sigmatron is far from a glamorous business with its razor thin margins, capital intensity, and the ability of its customers to delay purchase orders with limited warning. These unattractive attributes along with a heavy debt load, declining earnings, and management’s capital allocation checkered past are why SGMA can be purchased for less than one third of book value and 3x normalized earnings. SGMA has been near breakeven through the first two quarters of FY24 and has already indicated that Q3 appears challenging. The consumer products segment of their business appears to be struggling the most as higher interest rates have led to a significant slowdown in large consumer goods purchases. Slowing inflation and Fed rate cuts could provide a tailwind for the consumer products segment to return to growth. On a positive note, the company was able to release nearly $20M from inventory during the first six months. I expect inventory levels to decrease further to more historical levels of revenue, providing an additional $20-30M for debt paydown. The company also announced several large new contracts but are not expected to provide a benefit until FY25. The immediate future looks pessimistic but reduced debt, lower interest rates, and the impact of new contracts will eventually have a positive impact on Sigmatron’s fundamentals.”
An experienced electronic technician soldering a PCB circuit board.
SigmaTron International, Inc. (NASDAQ:SGMA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, SigmaTron International, Inc. (NASDAQ:SGMA) was held by 2 hedge fund portfolios, compared to 1 in the previous quarter, according to our database. 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.