Here’s Why Headwaters Capital Sold its Cardlytics (CDLX) Stake

Headwaters Capital, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of 4.5% was recorded by the fund for the fourth quarter of 2021, underperforming the Russell Mid Cap Index that delivered a +6.4% return for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Headwaters Capital, in its Q4 2021 investor letter, mentioned Cardlytics, Inc. (NASDAQ: CDLX) and discussed its stance on the firm. Founded in 2008, Cardlytics, Inc. is an Atlanta, Georgia-based transaction-driven marketing solutions provider with a $1.5 billion market capitalization, and is currently spearheaded by its CEO, Lynne Laube. CDLX delivered a -29.16% return since the beginning of the year, while its 12-month returns are down by -64.52%. The stock closed at $46.82 per share on March 11, 2022.

Here is what Headwaters Capital has to say about Cardlytics, Inc. in its Q4 2021 investor letter:

Sells: Cardlytics (“CDLX”). The CDLX position was sold during the quarter as it had become an opportunity cost in the portfolio. CDLX was a small position at the beginning of the year and has subsequently underperformed throughout the year due to a couple of poor strategic acquisitions along with a depressed spending environment from its customer base. The acquisitions were particularly concerning given that the company has not articulated a clear strategic rationale for the deals and have delayed the company’s path to profitability given that both of the acquired companies are generating losses. Given the small size of the position and the need for capital for more attractive investment opportunities, the entire CDLX position was sold during the quarter.”

Our calculations show that Cardlytics, Inc. (NASDAQ: CDLX) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. CDLX was in 27 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 23 funds in the previous quarter. Cardlytics, Inc. (NASDAQ: CDLX) delivered a -31.30% return in the past 3 months.

In January 2021, we also shared another hedge fund’s views on CDLX in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

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