Choice Equities, a hedge fund manager, released its second quarter investor letter recently. You can view it here. In the second quarter, the fund generated a -17.4% net loss leading to a -34.6% year-to-date performance. Interest rate hikes and market sentiments affected the fund’s performance in the quarter. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
In the second quarter investor letter, Choice Equities discussed stocks like Farmer Bros. Co. (NASDAQ:FARM). Headquartered in Northlake, Texas, Farmer Bros. Co. (NASDAQ:FARM) engages in the business of coffee, tea, and culinary products. On August 26, 2022, Farmer Bros. Co. (NASDAQ:FARM) stock closed at $5.75 per share. One-month return of Farmer Bros. Co. (NASDAQ:FARM) was 12.30%, and its shares lost 20.80% of their value over the last 52 weeks. Farmer Bros. Co. (NASDAQ:FARM) has a market capitalization of $106.077 million.
Here is what Choice Equities specifically said about Farmer Bros. Co. (NASDAQ:FARM):
“Farmer Bros. Co. (NASDAQ:FARM) remains unloved and overlooked. I recently had the opportunity to visit with the company and some other shareholders while touring the new plant in Dallas, TX. Reviewing the visit on my flight home, I had two primary takeaways. First, this company’s operating environment has been exceptionally difficult since this management team took over in late 2019. A great number of the company’s customers were closed due to the pandemic, while coffee-focused day parts like breakfast and locations like hotels have been slower to return to normal purchasing patterns than others.
Though the external environment has not cooperated, execution on items within the company’s control have been more promising, as management has positioned the company to prosper when normalcy returns. Second, the company’s market cap of $<90M seems quite at odds with the assets at hand and quality and depth of the management team. After accounting for liabilities and the network value including items such as land that are not on the balance sheet at updated prices, shares trade well underneath net asset value.
The team remains steadfast in the belief a high single digit EBITDA margin can be achieved, suggesting our initial underwriting assumptions are still on the mark, albeit delayed. Additionally, I was encouraged to learn the new plant is still operating far below capacity, implying that in years to come, the company could almost double the current revenue run rate on the existing assets.”
Farmer Bros. Co. (NASDAQ:FARM) is not on the list of 30 Most Popular Stocks Among Hedge Funds. Farmer Bros. Co. (NASDAQ:FARM) was held by 6 hedge fund portfolios at the end of the second quarter compared to 6 in the previous quarter.
We discussed Farmer Bros. Co. (NASDAQ:FARM) in another article and shared Choice Equities Capital Management’s views on the company. You can check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other prominent investors.
Disclosure: None. This article is originally published at Insider Monkey.
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