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Does Bassett Furniture Industries, Incorporated (BSET) Have a Compelling Risk/Reward Opportunity?

Merion Road Capital, an investment advisor, released its first quarter 2024 investor letter. A copy of the letter can be downloaded here. In the first quarter, Merion Road Small Cap Fund returned 4.9% compared to 5.0% for the Russell 2000 Index. The long-only portfolio of Merion Road rose 12.9% during the quarter compared to a 10.4% return for the S&P 500 Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Merion Road Capital featured stocks like Bassett Furniture Industries, Incorporated (NASDAQ:BSET) in the first quarter 2024 investor letter. Headquartered in Bassett, Virginia, Bassett Furniture Industries, Incorporated (NASDAQ:BSET) manufactures, markets, and retails home furnishings. On April 17, 2024, Bassett Furniture Industries, Incorporated (NASDAQ:BSET) stock closed at $13.32 per share. One-month return of Bassett Furniture Industries, Incorporated (NASDAQ:BSET) was -9.94%, and its shares lost 8.20% of their value over the last 52 weeks. Bassett Furniture Industries, Incorporated (NASDAQ:BSET) has a market capitalization of $117.599 million.

Merion Road Capital stated the following regarding Bassett Furniture Industries, Incorporated (NASDAQ:BSET) in its first quarter 2024 investor letter:

“The Small Cap Fund increased 4.9% during the quarter. One timely position to discuss is Bassett Furniture Industries, Incorporated (NASDAQ:BSET). BSET is a 120-year-old manufacturer, wholesaler, and retailer of upper-middle / upper-end furniture. This is an asset heavy company. On the back-end they own and operate 2 wood manufacturing facilities in Virginia, 2 upholstery facilities in North Carolina and Alabama, and 3 warehouses. They own and operate 8 retail locations that cover more than 200k sq feet of retail space; and they operate another 49 owned stores that are leased. Additional distribution comes from 31 Bassett branded retail stores operated by 3rd parties, as well as wholesale sales into other retailers. Up until 2022 BSET had an internal distribution (trucking) company; this was sold to J.B. Hunt for $87mm with part of the proceeds used for a special dividend.

BSET has historically generated a 4-5% EBIT margin across its wholesale and retail business. Right now they are slightly loss making as the industry works through a glut in supply. LTM revenue is at $390mm which is right around where the company used to run pre-covid. Of course sales could dip further as retailers de-stock and demand lags given higher interest rates and slower home sales. But long-term I think it is fair to assume that this company could generate something like $20mm of EBIT…” (Clik here to read the full text)

A closeup of a blue-collar worker producing a sofa for a retail company.

Bassett Furniture Industries, Incorporated (NASDAQ:BSET) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Bassett Furniture Industries, Incorporated (NASDAQ:BSET) was held by 9 hedge fund portfolios, compared to 6 in the previous quarter, according to our database.  In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

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

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
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  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

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Wall Street calls this $3 stock a “Melting Ice Cube.” They said the same thing about BTI before it returned 90%.

Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

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