In a recent 13G filing with the SEC, Glenn J. Krevlin’s Glenhill Advisors disclosed its ownership of nearly 6.24 million shares of UTi Worldwide Inc. (NASDAQ:UTIW). This marks an increase of 1.45 million shares from the stake disclosed in the firm’s latest 13F filing for the June 30 reporting period. The freshly-updated passive stake accounts for 5.9% of the company’s outstanding common shares.
Prior to providing a more thorough analysis on UTi Worldwide, let’s introduce the investment firm that has become more bullish on it. Glenhill Capital is a New York-based fundamental hedge fund co-established by Glenn J. Krevlin and Michael A. Pollack in 2001. The firm employs a long/short strategy in making its investments and primarily invests in small-cap equities in global public equity markets. Furthermore, Glenhill Capital utilizes a bottom-up stock picking approach, while its large bets might be followed by activist stances in some cases. Earlier this month, Glenhill Advisors disclosed a 5.3% ownership stake in Allscripts Healthcare Solutions Inc. (NASDAQ:MDRX).
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Glenhill Advisors is just one of more than 700 hedge funds that we have in our database, whose equity portfolios we collate quarterly as part of our small-cap strategy. Even though most smaller investors believe that tracking 13F filings is a fruitless endeavor because they are filed with a delay of a maximum of 45 days after the end of a calendar quarter, the results of our research prove that is not the case. To be on the safe side, we used a delay of 60 days in our backtests that involved the 13F filings of funds between 1999 and 2012 and we still managed to gain an annual alpha in the double digits. Moreover, since the official launch of our strategy in August 2012, our small-cap strategy has obtained returns of 118%, beating the S&P 500 Total Return Index by greater than 60 percentage points (see the details).
We can now turn our full attention to UTi Worldwide Inc. (NASDAQ:UTIW), which is a non-asset-based supply chain services and solutions company. To be more detailed, the company offers air and ocean freight forwarding, contract logistics, customs brokerage, distribution, inbound logistics, truckload brokerage and other supply chain management services. The shares of UTi Worldwide experienced a serious slump at the end of March, when the company posted its fourth quarter financial results for fiscal 2015, and have embarked on a steady downtrend since the end of June, supposedly fueled by a weakening global economy. The company’s recently-published financial results for the second fiscal quarter of 2016 put even more downward pressure on the stock. In the meantime, Claus Moller’s P2 Capital Partners represents the largest shareholder of UTi Worldwide among the hedge funds tracked by Insider Monkey, holding 11.27 million shares as of June 30.
UTi Worldwide’s operating activities are subject to seasonal fluctuations, especially in its Freight Forwarding segment. Therefore, the company generally experiences increased activity during its peak season, which is during the second and third fiscal quarters. However, the company acknowledged that some preliminary indications suggest a potential weakening in its supposed peak season, so it expects lower airfreight trade volumes during the third fiscal quarter. Even so, UTi Worldwide announced a few days ago that it would assist Sedgman Limited, one of its longtime clients, in transporting a mineral processing plant in several sections from China to the United States. These sections, which weigh 10,000 tons on aggregate, are set to be shipped to New Jersey in early 2016.
UTi Worldwide Inc. (NASDAQ:UTIW)’s fiscal 2015 turned out to be a challenging year for the company, but fiscal 2016 does not show any strong signs of recovery either. On September 3, the company reported its financial results for the second quarter of 2016 that ended July 31, posting revenues of $913.9 million, down by 16.5% year-over-year. Net revenues decreased as well, reaching $338.5 million, down from $393.7 million reported last year. The top-line was mainly impacted by lower air and ocean volumes in freight forwarding, along with the strengthening U.S. dollar. Furthermore, the company’s adjusted EBITDA for the quarter came to $11.2 million, compared with $23.8 million reported a year ago.
To sum up, the shares of UTi Worldwide have lost more than half of their value since the beginning of the year, but they might have been hit by the market too strongly. Unquestionably, Glenn J. Krevlin’s Glenhill Advisors looks at this stock as an attractive investment opportunity, so make sure that you do not pass by this stock without taking a closer look at its fundamentals.
Disclosure: None
