4. MGP Ingredients, Inc. (NASDAQ:MGPI)
Number of Hedge Fund Holders: 17
MGP Ingredients, Inc. (NASDAQ:MGPI) produces and provides distilled drinks, branded spirits, and food ingredients in the United States and globally. It works in three segments – Distillery Solutions, Branded Spirits, and Ingredient Solutions. The company sells its products either directly or through distributors, serving manufacturers, processors of finished products, and even bakeries. MGP Ingredients, Inc. (NASDAQ:MGPI) is one of the best vegan stocks to buy. On August 3, MGP Ingredients, Inc. (NASDAQ:MGPI) reported a Q2 non-GAAP EPS of $1.49 and a revenue of $209 million, exceeding Wall Street estimates by $0.24 and $3.73 million, respectively.
According to Insider Monkey’s second quarter database, 17 hedge funds were bullish on MGP Ingredients, Inc. (NASDAQ:MGPI), in contrast to the preceding quarter when 25 funds had invested in the stock. Richard Driehaus’ Driehaus Capital held a significant position in the company, comprising 188,088 shares valued at $19.99 million.
SouthernSun SMID Cap Strategy made the following comment about MGP Ingredients, Inc. (NASDAQ:MGPI) in its second quarter 2023 investor letter:
“We initiated a position in MGP Ingredients, Inc. (NASDAQ:MGPI) in April of 2023. MGPI is a leading supplier of premium distilled spirits and specialty wheat starches and proteins in the U.S. MGPI operates through three distinct segments, each of which has attractive opportunities for growth. Through its distilling solutions segment, MGPI is a leading supplier of distilled spirits, facilitating the creation of bourbons, rye whiskeys, American single malt whiskey, distilled gins and vodkas. U.S. spirits have gained a significant share of total beverage alcohol over the last decade on a revenue basis, and American whiskey volumes, in particular, have experienced strong growth, driven in part by the growth of craft brands. In our opinion, these trends in consumption habits tend to be generational, which suggests that this recent demand strength is sustainable. MGPI maintains a large inventory of distilled spirits of various ages, which is used to produce its own branded spirits and sold to both multinational and craft producers of branded spirits. The time and capital required to age new distillate is significant, and that capital is often better used in marketing new brands, and MGPI is in a unique position to serve this market. As of the end of the first quarter of 2023, the vast majority of MGPI’s new distillate capacity was contracted for both this year and next as well as the majority of its aged distillate for this year.
In addition to its distillation capabilities, MGPI also develops its own branded spirits, and the branded spirits segment provides a platform for both organic and acquisitive growth opportunities. Building individual spirits brands can be challenging, in part due to the three-tier distribution system in the U.S., which requires individual brands to comply with various state laws and state-licensed distributors. In 2021, MGPI acquired Luxco, Inc., which significantly expanded its portfolio of branded spirits and brought with it distribution capabilities across all 50 states. Since acquiring Luxco, MGPI has continued to expand its distilling capacity and increase sales of its premium, super premium and ultra premium brands, which generate higher gross margins than other portfolio brands. In June of 2023, MGPI announced the acquisition of Penelope Bourbon, adding a popular, growing bourbon brand to the portfolio. This transaction is the first tangible example of how we believe management will leverage its national distribution platform and existing distillation capacity to bring other brands into the fold. We expect acquisitions like this one to be a key element of the future value creation opportunity…”
