Upslope Capital Management, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of +0.8% was recorded by the fund for the second quarter of 2022, compared to the S&P Midcap 400 ETF and the HFRX Equity Hedge Index which delivered -15.4% and -4.4% gains for the same period. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Upslope Capital Management mentioned Ball Corporation (NYSE:BALL) and explained its insights for the company. Founded in 1880, Ball Corporation (NYSE:BALL) is a Broomfield, Colorado-based aerospace company with a $23.5 billion market capitalization. Ball Corporation (NYSE:BALL) delivered a -23.59% return since the beginning of the year, while its 12-month returns are down by -9.20%. The stock closed at $73.56 per share on July 28, 2022.
Here is what Upslope Capital Management has to say about Ball Corporation (NYSE:BALL) in its Q2 2022 investor letter:
“Ball is a simple business, focused primarily on producing beverage cans (90% of segment earnings, with the remainder largely focused on niche aerospace instruments, sensors, and spacecraft). An aggressively un-sexy business, “bevcans” is an attractive niche with historically low sensitivity to macro volatility and solid pricing power (due to tight contractual pass-through of raw material costs and a highly consolidated industry). Barriers to entry aren’t particularly high, but it is challenging for sub-scale entrants to compete and operate efficiently vs. large global players such as Ball. At its foundation, the business is driven by canned beverage (beer, soft/energy drinks, etc.) volumes, with a modest, but persistent uplift owing to a long-term shift from glass and plastic beverage packaging to aluminum (lighter, easier to recycle, and less energy-intensive).
No surprise, the core of Upslope’s thesis isn’t about heart-racing upside so much as it is about owning a well-managed, attractive business with limited downside and a history of double-digit free cash flow growth. Ball shares have struggled significantly over the past 18 months. 2021 was the stock’s worst year of relative (vs. S&P 500) underperformance since at least 2000 (a fun fact for those of us that believe we just concluded Tech Bubble 2.0). 2022 kicked off similarly. While the S&P 500 itself saw one of its worst starts to a year ever, Ball shares underperformed even that by an additional 11% (-30% in 1H). Much of this was, in my view, due to a badly needed correction of over-valuation. In recent years Ball became an “ESG” darling, owing to its (logical) messaging around sustainability, as well as its steady performance through COVID-era macro volatility. This exuberance has finally been corrected, in my view…” (Click here to see the full text)
Our calculations show that Ball Corporation (NYSE:BALL) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Ball Corporation (NYSE:BALL) was in 37 hedge fund portfolios at the end of the second quarter of 2022, compared to 32 funds in the previous quarter. Ball Corporation (NYSE:BALL) delivered a -11.30% return in the past 3 months.
In January 2022, we also shared another hedge fund’s views on Ball Corporation (NYSE:BALL) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.