Giverny Capital Regrets Not Buying Floor & Decor Holdings Inc. (FND) Earlier

Giverny Capital Asset Management LLC recently published its second quarter investor letter 2022, which can be downloaded here.  The fund’s model portfolio returns declined by 18.48% net of fees in the second quarter of 2022. The current events in the market influenced the stocks’ short-term prices. The fund generated an annualized return of 17.02% over the last nine quarters, net of fees. You can check the top 5 holdings of the fund to see its best picks for 2022.

In the second quarter 2022 letter, Giverny Capital Asset Management discussed the performance of its portfolios over the last few years. Floor & Decor Holdings, Inc. (NYSE:FND)  is the fund’s latest addition. The stock benefited from the pandemic and generated outstanding returns. Floor & Decor Holdings, Inc. (NYSE:FND) is a flooring distributor and multi-channel retailer headquartered in Atlanta, Georgia. The stock of Floor & Decor Holdings, Inc. (NYSE:FND) closed at $80.57 per share on July 29, 2022. Last month, the return of Floor & Decor Holdings, Inc. (NYSE:FND) rose to 24.01%, whereas its 12-month return dropped to -33.96%. Floor & Decor Holdings, Inc. (NYSE:FND) has a market capitalization of $8.529 billion.

Here is what Giverny Capital Asset Management specifically said about Floor & Decor Holdings, Inc. (NYSE:FND):

“My partner Francois Rochon wrote in his 2020 annual letter that not buying Floor & Decor Holdings, Inc. (NYSE:FND) during the wipeout in stocks in March 2020 was his biggest mistake that year. I felt the same. It took two years, but we addressed that regret. Floor & Décor sells hard-surface flooring – wood, ceramic tile and laminate – to homeowners, commercial buildings and professional contractors. It has quickly become the largest hard flooring retailer in the country. I believe it has lower procurement costs than others, letting it sell flooring at an everyday low price in large, highly productive stores. It has a deep inventory position, so a 5 landlord or contractor who needs to install new floors on short notice can find what he’s looking for today.

Floor & Décor benefited from a boom in sales during the pandemic, as people were focused on upgrading their living spaces. Its momentum probably will slow for some time as people spend more on experiences and travel and less on their homes. But its stores generate excellent returns on capital, it competes against a fragmented landscape of weak mom-and-pop retailers, and it has a clear path to tripling the store base over time. GCAM paid $70 per share for Floor & Décor, about half the 52-week high but about double what we could have paid in spring 2020.”

Patryk Kosmider/Shutterstock.com

Our research shows that Floor & Decor Holdings, Inc. (NYSE:FND) isn’t on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held Floor & Decor Holdings, Inc. (NYSE:FND) at the end of the first quarter which was 36  in the previous quarter. Floor & Decor Holdings, Inc. (NYSE:FND) shares gained 34.31% of their value over the last 52 weeks.

We published another article in June on  Floor & Decor Holdings, Inc. (NYSE:FND) and shared Argosy Investors’ thoughts about the company. If you want to read more investor letters from hedge funds and other leading investors, check out our hedge fund investor letters Q2 2022 page.

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