Is Collectors Universe (CLCT) a Smart Long-term Buy?

Alta Fox Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. The Alta Fox Opportunities Fund posted a return of 30.8% for the quarter (net), outperforming its benchmark, the S&P 500 which returned 8.93% in the same quarter. You should check out Alta Fox Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Alta Fox Capital highlighted a few stocks and Collectors Universe Inc (NASDAQ:CLCT) is one of them. Collectors Universe Inc (NASDAQ:CLCT) provides authentication and grading services. Year-to-date, Collectors Universe Inc (NASDAQ:CLCT) stock gained 211.1% and on November 5th it had a closing price of $71.70. Here is what Alta Fox Capital said:

“CLCT was discussed extensively in our Q2-2020 quarterly letter so we will not rehash the thesis, but we believe a brief update on the position is warranted given significant events throughout the quarter.

On September 29th, Alta Fox reached a successful public settlement with CLCT. Since our original activism announcement through the settlement date, we have been pleased with significant positive change at the company:

• Five of the eight board members going forward are new

• The company has hired an investor relations firm

• The company will obtain coverage by at least one sell-side analyst within the next six months

• The company has committed to attending at least two investor conferences in 2021

• There is a new Chairman of the Board

• The Alta Fox Board appointee was chosen to lead a newly formed Strategy Committee

These are significant steps to unlock potential value and the stock is up over 100% since our original announcement of activism. CLCT remains a core position for Alta Fox today as we have increased confidence that CLCT’s leadership team can capitalize on the significant changes in the collectibles marketplace to drive value for shareholders.”

Pixabay/Public Domain

In July, we published an article revealing Alta Fox Capital bullish investment thesis on Collectors Universe Inc (NASDAQ:CLCT) stock in its Q2 2020 investor letter. This suggests that the investment firm has been bullish for a long time on Collectors Universe Inc (NASDAQ:CLCT).

In Q1 2020, the number of bullish hedge fund positions on Collectors Universe Inc (NASDAQ:CLCT) stock decreased by about 20% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in CLCT’s growth potential. Our calculations showed that Collectors Universe Inc (NASDAQ:CLCT) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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