SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun SMID Cap Strategy” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the strategy returned 5.47% on a gross basis compared to a 3.39% return for the Russell 2500 Index and 1.40% for the Russell 2500 Value Index. Since its inception, the strategy has continued to outperform both indexes on an annualized gross and net basis. The strategy returned 1.52% on a gross basis over the trailing twelve months compared to -10.39% and -10.53% returns for indexes respectively. In addition, please check the top 5 holdings of the strategy to know its best pick in 2023.
SouthernSun SMID Cap Strategy highlighted stocks like WestRock Company (NYSE:WRK) in the first quarter 2023 investor letter. Headquartered in Atlanta, Georgia, WestRock Company (NYSE:WRK) provides fiber-based paper and packaging solutions. On May 5, 2023, WestRock Company (NYSE:WRK) stock closed at $28.45 per share. One-month return of WestRock Company (NYSE:WRK) was -5.54%, and its shares lost 44.55% of their value over the last 52 weeks. WestRock Company (NYSE:WRK) has a market capitalization of $7.245 billion.
SouthernSun SMID Cap Strategy made the following comment about WestRock Company (NYSE:WRK) in its Q1 2023 investor letter:
“WestRock Company (NYSE:WRK), a leading provider of corrugated and consumer packaging in the U.S., reported fiscal first quarter results that were below expectations and was a top detractor for the quarter. Strong pricing drove 1% sales growth in the corrugated packaging segment and 7% growth in the consumer packaging segment, but sales in the global paper segment declined 17% in the quarter due to weak export demand for containerboard. Consolidated EBITDA was down 4% for the quarter, impacted by weakness in the global paper segment and economic downtime taken throughout the mill system. WestRock ended its first fiscal quarter with net debt to trailing 12-months EBITDA of 2.35x, slightly above its targeted range of 1.75-2.25x, driven primarily by the acquisition of the remaining interest in Grupo Gondi. While macroeconomic weakness continues to weigh on demand for packaging, we believe WestRock operates a resilient business model with exposure to a diverse range of end markets. The business has generated over $1 billion in free cash flow in each of the last seven years, and we believe they will exceed that level again during fiscal 2023. Management has demonstrated a commitment to improving returns on capital by shuttering older, inefficient mills, selling its uncoated recycled board mills, and increasing exposure to the growing Latin American market through its acquisition of Grupo Gondi. We believe that shareholders will benefit from these efforts over the long term.”
WestRock Company (NYSE:WRK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held WestRock Company (NYSE:WRK) at the end of the fourth quarter which was 48 in the previous quarter.
We discussed WestRock Company (NYSE:WRK) in another article and shared the list of biggest packaging companies in the US. In addition, please check out our hedge fund investor letters Q1 2023 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.
