Argosy Investors on Grocery Outlet (GO): “The Long-Term Returns in the Mid-Teens are Still Intact”

Argosy Investors, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. For the third quarter of 2021, the fund’s year-to-date 2021 performance was 17.1% in select accounts, while S&P 500 by comparison returned 15.9% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Argosy Investors, in its Q3 2021 investor letter, mentioned Grocery Outlet Holding Corp. (NASDAQ: GO) and discussed its stance on the firm. Grocery Outlet Holding Corp. is an Emeryville, California-based supermarket company with a $2.7 billion market capitalization. GO delivered a -27.59% return since the beginning of the year, while its 12-month returns are down by -26.11%. The stock closed at $28.42 per share on November 22, 2021.

Here is what Argosy Investors has to say about Grocery Outlet Holding Corp.  in its Q3 2021 investor letter:

“GO stock has declined significantly, over 30%, since our initial purchase. I don’t especially enjoy sharing our failures, even short-term ones, with you. I hope by being transparent with you about both the good and the bad that I will earn your trust over time. GO’s decline was particularly surprising to me because they are a chain of grocery stores with a long runway for growth nationwide.

It seems like GO’s extremely predictable drop in sales from a pandemic-driven spike in 2020 has spooked some investors, temporarily. I am often surprised by how short-term Wall Street can be, and I believe GO’s decline represents an attractive opportunity to add to our position, which I did during the 3^rd quarter. We believe the long-term returns in the mid-teens are still intact, and we think the recent decline could allow our returns to be closer to 20%+ in the short-term if our thesis for the business turns out to be correct.”

Photo by Boxed Water Is Better on Unsplash

Based on our calculations, Grocery Outlet Holding Corp. (NASDAQ: GO) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. GO was in 19 hedge fund portfolios at the end of the third quarter of 2021, compared to 13 funds in the previous quarter. Grocery Outlet Holding Corp. (NASDAQ: GO) delivered a 9.90% return in the past 3 months.

Disclosure: None. This article is originally published at Insider Monkey.