Ravensource Fund, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. Ravensource Fund’s (“Ravensource” or the “Fund”) net asset value (“NAV”) per unit increased by 11.9% over 2021, including distributions received by investors. As the fund invests in underfollowed and unloved opportunities, Ravensource’s investments can be particularly exposed to temporary market losses during flights to quality. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q4 2021 investor letter, Ravensource Fund mentioned Algoma Steel Group Inc. (NASDAQ:ASTL) and explained its insights for the company. Founded in 1902, Algoma Steel Group Inc. (NASDAQ:ASTL) is a Sault Ste. Marie Canada-based steel production company with a $1.6 billion market capitalization. Algoma Steel Group Inc. (NASDAQ:ASTL) delivered a 0.09% return since the beginning of the year, while its 12-month returns are up by 9.96%. The stock closed at $10.82 per share on April 14, 2022.
Here is what Ravensource Fund has to say about Algoma Steel Group Inc. (NASDAQ:ASTL) in its Q4 2021 investor letter:
“Algoma is a Canadian steel producer based in Sault Ste. Marie, Ontario. It emerged from insolvency in November 2018 with a clean balance sheet and began its operating turnaround. It remained a private company until October 2021, when it merged with a public SPAC.
Algoma is the classic “orphan security” we’ve successfully profited off in the past: a post- restructuring stock which has yet to find a stable, long-term oriented investor base. Algoma is unquestionably cheap. It generates tremendous cash flow at current steel prices, and likely will earn its entire market cap in less than 18 months — both quickly de-risking us and providing substantial upside. The issue is that despite the public listing Algoma: 1) remains largely owned by its pre-CCAA creditors, who want out; and 2) new equity investors are staying away for now due to its CCAA overhang; out-of-favour industry; and lack of historical public financials.
Our history with steel and Algoma specifically, along with our comfort investing in post-CCAA companies, enabled us to invest where others resisted. We believed Algoma would use its cash as a tool to foster investor demand by distributing it through dividends and buybacks. However, like KEC, Algoma has only recently become a public company: its management has yet to pitch itself to institutional investors and develop a broad, strong, investor base who have bought into its long- term prospects. Building a public track record and following will take time but ultimately, consistent cash flow and investor greed will prevail…” (Click here to see the full text)
Pixabay / Public Domain
Our calculations show that Algoma Steel Group Inc. (NASDAQ:ASTL) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Algoma Steel Group Inc. (NASDAQ:ASTL) was in 37 hedge fund portfolios at the end of the fourth quarter of 2021. Algoma Steel Group Inc. (NASDAQ:ASTL) delivered a 7.77% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.