Alphyn Capital Management, an investment management firm, released its fourth-quarter 2022 investor letter. The same can be downloaded here. The fund returned 20.4% in the fourth quarter compared to a 7.6% return for the S&P500 Index. For 2022, the fund returned -20.8% compared to the -18.1% return for the S&P 500 Index. The top 10 positions comprised 78% of the portfolio as of 31 December 2022, and the portfolio held 1% in cash. In addition, please check the fund’s top five holdings to know its best picks in 2022.
Alphyn Capital highlighted stocks like Wayfair Inc. (NYSE:W) in the Q4 2022 investor letter. Headquartered in Boston, Massachusetts, Wayfair Inc. (NYSE:W) is an e-commerce company that operates worldwide. On January 30, 2023, Wayfair Inc. (NYSE:W) stock closed at $58.68 per share. One-month return of Wayfair Inc. (NYSE:W) was 79.12%, and its shares lost 63.90% of their value over the last 52 weeks. Wayfair Inc. (NYSE:W) has a market capitalization of $6.286 billion.
Alphyn Capital made the following comment about Wayfair Inc. (NYSE:W) in its Q4 2022 investor letter:
“As I have mentioned a few times in these letters, I mistimed buying Wayfair Inc. (NYSE:W) shares, as I misjudged the extent of the “revenue pull forward.” In other words, people stuck at home during covid lockdowns spent more than they usually would on stuff for their homes, and this trend reversed sharply in 2021/2. Given the steep decline in Wayfair’s price, I decided to tax loss harvest, reentering the position following a full 30 days to ensure we did not fall foul of the wash rule.
As I wrote in my Q2 2022 letter, “I will be looking for evidence of better operational controls over the next few quarters.” There has not been a tremendous amount of information so far; however, on November 29, the company released a trading update for the Thanksgiving Day through Cyber Monday 5-day peak shopping period, disclosing “a low single-digit sales increase in the US compared to the same period in 2021.” Price promotions drove the sales, funded by vendors, as Wayfair holds little inventory itself. The promotions, therefore, have little impact on Wayfair’s gross margins. Management has received the message from investors on reigning in costs and profitability, an area entirely within their control and focused on sales growth.2 As sales normalize over the next 1- 2 years, following an unusual period in home goods retailing, Wayfair should receive its fair share of the market given its attractive customer proposition: wide selection, in-stock availability, and fast delivery, given its significant investment in logistics. The company trades at a little under 0.5x sales, so it shouldn’t take much to recover.”
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Wayfair Inc. (NYSE:W) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held Wayfair Inc. (NYSE:W) at the end of the third quarter, which was 22 in the previous quarter.
We discussed Wayfair Inc. (NYSE:W) in another article and shared the list of most shorted stocks hedge funds are buying. In addition, please check out our hedge fund investor letters Q4 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.
