Was Kerrisdale Capital’s Bet on JGWPT Holdings Inc (JGW) a Mistake?

Sahm Adrangi, the manager of Kerrisdale Capital has been bullish on the purchaser of structured settlements JGWPT Holdings Inc (NYSE:JGW) since February, when the fund disclosed boosting its stake in the company to 6.1%. In this way, Kerrisdale currently owns 682,600 shares of the company, versus 228,300 shares disclosed previously. Later on, the fund issued a report explaining its bullish position on the company.

JGWPT website logo x288

However, since the fund reported an increase of its holding of JGWPT Holdings Inc (NYSE:JGW), its stock price dropped by almost 14%, and since the beginning of April, it slumped by around 19%, mainly on the back of a weak financial performance. At the end of March, the company reported its financial results for the fourth quarter and full 2013. The company reported a 16% drop in revenues for the fourth quarter to $106.6 million, and a net loss of $5.4 million, versus an income of $38.6 million in the same period of 2012. The stock trades at a forward P/E of 6.xx, and the average recommendation for the stock stands at ‘Buy’ with the average target price of around $19.80.

Among the strong points that support its bullish case, Kerrisdale mentioned the strong brand name and customer base. JGWPT Holdings Inc (NYSE:JGW) had a market share of around 60%-70%, which positions it as one of the industry leaders. Moreover, the fund highlighted the great growth prospects, and a conservative DCF valuation, which implied a 75% upside to the market price.

The full report can be accessed below:

Kerrisdale Report on JGWPT Holdings

In addition, a couple of days after the report has been issued, in an interview, Sahm Adrangi stated that he is bullish on JGWPT Holdings Inc (NYSE:JGW) because it “operates a highly profitable and well managed business and trades at a very reasonable valuation.”

“We think investors are waiting for a couple of quarters to see the free cash flow show itself and the company has adjusted numbers and when that does the shares will be bid up,” Mr. Adrangi also said.

Check out the full interview:

Several other hedge funds also seemed to be fond of JGWPT Holdings Inc (NYSE:JGW), initiating positions in the company after its IPO in November 2013. Derek C. Schrier‘s Indaba Capital Management reported, in its latest 13F, ownership of 1.05 million shares of the company, followed by Ken Griffin‘s Citadel Investment Group with around 643,000 shares.

Disclosure: none

Recommended Reading:

Greenlight Capital 2014 Q1 Investor Letter

Lone Pine Capital Surges Position in Michael Kors Holdings Ltd (KORS)

Hedge Fund News: Bill Ackman, Crispin Odey & David Tepper

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!