Hidden Gems: Unveiling the 5 Stocks on Hedge Funds’ Radar

3.Turning Point Brands, Inc. (NYSE:TPB)

2024 Performance: 24.35%

Number of Hedge fund holdings in Q4:16

Established in 1988, Turning Point Brands, Inc. (NYSE:TPB), manufactures, markets, and distributes branded consumer products. The company operates through Zig-Zag Products, Stoker’s Products, and Creative Distribution Solutions segments. As per Turning Point Brands, Inc. (NYSE:TPB) Q1 2024 Earnings Call Transcript, the company continued to progress in the first quarter and generated results in line with and sometimes better than expectations. Turning Point Brands, Inc.’s (NYSE:TPB) growth potential, room for expansion and brand recognition make it an investment choice among potential buyers. Analysts have strong faith in the future prospectus of the company. The growth estimate of Turning Point Brands, Inc. (TPB) for the current year is 7.60%. Insider Monkey featured Turning Point Brands, Inc. (NYSE:TPB) in the article Top 20 Most Valuable Tobacco Companies in the World.

Atai Capital Management stated the following regarding Turning Point Brands, Inc. (NYSE:TPB) in its first quarter 2024 investor letter:

“Turning Point Brands, Inc. (NYSE:TPB) is a manufacturer, marketer, and distributor of branded consumer products. The business has three segments, which we’ll discuss shortly: Stoker’s, Zig-Zag, and New-Gen.

Turning Point Brands has had a somewhat hectic past with a few strategic pivots and three CEOs over the past few years. This is not a well-loved company, and many investors have gotten burned since its 2016 IPO. As a quick anecdote, nearly everyone I’ve spoken to seems to have a negative opinion/story about Turning Point. However, therein lies the opportunity, and we believe the company is now set up for MSD or higher consolidated top-line growth (excluding its new-gen segment) and even faster bottom-line growth.

I do want to add some additional color here. Investors who have previously lost money on Turning Point Brands usually overpaid on the back of what they assumed would be rapid growth in one of its segments. In 2018-2019, their New-Gen segment was expected to continue its rapid growth trajectory through acquisitions and organic growth, but the FDA would crack down on Vapes/E-Cigs, leaving this business in limbo to this day. From 2020-2021, Zig-Zag was over-earning, and investors wrongly extrapolated this growth into the future…” (Click here to read the full text)