Here’s Why Arch Capital Invested in IAC

Investment management company Arch Capital recently released its second quarter 2022 investor letter. A copy of the same can be downloaded here. Year to date, the fund returned -24.6% net of realized and estimated fees, compared to -20.0% for the S&P 500 Total Return Index. Since its inception, the fund returned -27.2%.  You can check the top 5 holdings of the fund to know its best picks in 2022.

Arch Capital discussed stocks like IAC Inc. (NASDAQ:IAC) in the second quarter investor letter. Headquartered in New York, New York, IAC Inc. (NASDAQ:IAC) is a media and internet provider. On August 23, 2022, IAC Inc. (NASDAQ:IAC) stock closed at $65.07 per share. One-month return of IAC Inc. (NASDAQ:IAC) was -3.93% and its shares lost 49.80% of their value over the last 52 weeks. IAC Inc. (NASDAQ:IAC) has a market capitalization of $5.96 billion.

Here is what Arch Capital specifically said about IAC Inc. (NASDAQ:IAC):

“Our goal for investors in the Arch Capital Fund is to compound capital at 15% annually while taking on as little risk as possible. This does not mean risk in the form of short-term stock price movements but does mean in the form of durability and future earnings power of the businesses we own.

At $71 a share, we believe IAC Inc. (NASDAQ:IAC) is one of the lowest-risk bets to have market-beating returns over the next 1, 3, and 5 years. The long-running acquirer and builder of internet brands has a fantastic track record since its inception in 1995 (13% total return CAGR vs. 10% in the S&P 500), even with its shares plummeting 44% so far in 2022.

At a market cap of $6.55 billion, the stock is severely undervalued vs. its potential earnings power over the next few years. Combine this with a rational executive team, $1.3 billion in dry powder, and acquisition candidates trading at depressed prices, and we are excited about the future potential for IAC shares…” (Click here to read more)

IAC Inc. (NASDAQ:IAC) is in not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held IAC Inc. (NASDAQ:IAC) at the end of the first quarter which was 48 in the previous quarter.

We discussed IAC Inc. (NASDAQ:IAC) in another article and shared Longleaf Partners Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.

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