Choice Equities Capital Management, a boutique investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A net return of 23.1% was recorded by the fund for the Q4 of 2020, outperforming its S&P 500 benchmark that delivered a 12.2% return, but below the 31.4% return of its Russel 2000 index. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Choice Equities Capital Management, in their Q4 2020 Investor Letter, said that Magnite, Inc. (NASDAQ: MGNI) is no longer undiscovered. Magnite, Inc. is an online advertising company that currently has a $6.5 billion market cap. For the past 3 months, MGNI delivered an impressive 290.76% return and settled at $53.90 per share at the closing of February 18th.
Here is what Choice Equities Capital Management has to say about Magnite, Inc. in their Q4 2020 investor letter:
“As alluded to above, Magnite, Inc. is no longer undiscovered. Shares surged on increased recognition of the company’s advantaged positioning in the programmatic advertising landscape. Key customer wins like Disney / Hulu and Omnicom and tightening relationships with The Trade Desk suggest they are a share-gaining winner in this attractive growing market. However, a few days into the year, the company was attacked by a short-seller’s report. The report claimed shares were overvalued and questioned management integrity citing merger-related accounting improprieties. Presumably, the authors found the shares a ripe target under the assumption investors would be quick to take profits after such a surge.
While I am typically keenly interested in understanding the bear case around any of our investments and hold the views of other market participants with great respect, in this case, I believe these claims to be baseless and without merit. In my three years of communicating with management (original write-up here, page 7), I have found them to be honest and credible at every turn. Though it is true shares have moved higher, and the company is no longer cheap on trailing metrics, it is also the case that the company is both exceptionally well-managed and exceptionally well-positioned in a rapidly accelerating market which together suggest company revenues and cash flows are likely to flourish in the coming years. As this is not my first encounter with these particular short sellers, I have some familiarity with their work. In prior years, I have owned a sell-off one of their short reports created. I have bought a selloff one of their short reports created. And now, the third time around, we have done a bit of both. Finally, as last week concluded, CEO Michael Barrett and the Magnite team struck again, this time purchasing SpotX and deftly positioning Magnite alone atop the list of exchanges competing to deliver programmatic CTV inventory of content providers to ad buyers.”
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