Evermore Global Advisors, LLC is a Summit, New Jersey-based investment management firm. It was co-founded by David Marcus and Eric LeGoff in 2009. Recently, Evermore Global Advisors released its Q1 2020 Investor Letter – a copy of which can be downloaded here. In the letter, the Evermore Global Value Fund posted a -30.66% return for the quarter underperforming its main benchmark indexes.
In the said letter, David Marcus highlighted a few chemical stocks like Corteva Inc. (NYSE:CTVA), Dow Inc. (NYSE:DOW), DuPont de Nemours, Inc. (NYSE:DD), and Kraton Corp (NYSE:KRA). The Evermore Global Value Fund exited its position in these chemical stocks. Here is what David Marcus said:
“With respect to Corteva, Dow and DuPont, COVID-19 related shutdowns that started in China painted an ominous picture for the global macro landscape, and we exited our positions in these three companies that comprised the former DowDupont (DWDP) beginning in February. Additionally, numerous channel checks we performed indicated that various supply chains were being disrupted and stressed, a poor sign for three companies that are very global in nature.
In retrospect, we remain generally happy with managements execution of many of the fundamental tenets of our original investment thesis in DWDP – the separations and spins were completed on time, the restructuring programs were well executed, and capital allocation across the three companies is much more streamlined and shareholder friendly today than in the past. Unfortunately, big picture issues that started with the U.S. – China trade war and remain today with the global collapse in macroeconomic activity has severely impacted each of the former DWDP companies. We will continue to remain close to each company and could reenter on or more of the aforementioned positions should an opportunity present itself.
We decided to move on from our position in Kraton, a specialty chemicals company, for many of the same reasons as discussed above for Corteva, Dow and DuPont. The bottom line is the prospects of the company are tied to global gross domestic product for which we have limited visibility today.”
In Q3 2019, the number of bullish hedge fund positions on Kraton stock decreased by about 12% from the previous quarter (see the chart here).
Disclosure: None. This article is originally published at Insider Monkey.