Is Dorman Products (DORM) A Smart Long-Term Buy?

Conestoga Capital Advisors, a boutique, independent investment management firm, published its fourth-quarter 2020 ‘Small Cap Growth & SMid Cap Growth’ Investor Letter – a copy of which can be downloaded here. A net return of 31% was recorded by Conestoga’s Small Cap Growth fund and 19.72% return by its SMid Cap Growth Fund for the the end year 2020. Both performed below their Russell 2000 Growth and Russell 2500 Growth benchmarks that delivered a 34.63% and 25.89% return respectively. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Conestoga Capital Advisors, in their Q4 2020 investor letter, emphasized that Dorman Products, Inc. (NASDAQ: DORM) is among their Small Cap Growth Fund’s top 5 laggards. Dorman Products, Inc. is a Pennsylvania-based company that offers home hardware and automotive products. It currently has a $3.4 billion market capitalization. Since the beginning of the year, DORM is up 22.77%, extending its 12-month gains to 80.23%. As of March 5, the stock closed at $106.59 per share.

Here is what Conestoga Capital Advisors has to say about Dorman Products, Inc. in their Q4 2020 investor letter:

“DORM is a market leader who designs and distributes after-market car parts. DORM delivered excellent Q320 results with revenue growing 18% and earnings growing 68% as the company benefited from the introduction of new products and as it
expands margins leveraging investments in a new DC. Despite these results, the stock did correct during the quarter with industry concerns about auto retail customers seeking lower cost suppliers in China.”

Our calculations show that Dorman Products, Inc. (NASDAQ: DORM) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Dorman Products, Inc. was in 21 hedge fund portfolios compared to 19 funds in the third quarter. DORM delivered a 10.72% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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