Is Heritage Global (HGBL) a Smart Long-Term Buy?

SRK Capital, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. SRK Fund I, LP declined by -17.57% during the first half of 2022. In contrast, the S&P 500 and the Russell 2000 declined by -19.96% and -23.44%, respectively. Since its inception, the Fund has appreciated 400.88% compared to 53.93% for the S&P 500 and 16.75% for the Russell 2000. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, SRK Capital mentioned Heritage Global Inc. (NASDAQ:HGBL) and explained its insights for the company. Founded in 1983, Heritage Global Inc. (NASDAQ:HGBL) is a San Diego, California-based capital market company with a $60.7 million market capitalization. Heritage Global Inc. (NASDAQ:HGBL) delivered a -11.76% return since the beginning of the year, while its 12-month returns are down by -21.05%. The stock closed at $1.65 per share on August 26, 2022.

Here is what SRK Capital has to say about Heritage Global Inc. (NASDAQ:HGBL) in its Q2 2022 investor letter:

Heritage Global is a new position added during the second quarter of this year. HGBL 1s on track for its most profitable year in history due to continued business execution and a near perfect economic scenario for its business. Heritage Global is in the business of facilitating the disposition of charge-off account receivable portfolios, surplus industrial machinery and equipment, and selective repurposing of real estate. Consumers have continued to spend, and they are borrowing more than ever to do so with credit card usage increasing at the fastest rate in over 20 years. Heritage should benefit from increased borrowing as this should lead to increased charge-offs that will flow through their business. HGBL has a strong balance sheet and is on pace to eclipse $8 million of EBITDA this year. Their strong business momentum combined with a sustained stock buyback and insider purchases should help the valuation move closer to fair value over the course of the remainder of the year.”

Photo by AlphaTradeZone

Our calculations show that Heritage Global Inc. (NASDAQ:HGBL) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Heritage Global Inc. (NASDAQ:HGBL) was in 3 hedge fund portfolios at the end of the second quarter of 2022, compared to 4 funds in the previous quarter. Heritage Global Inc. (NASDAQ:HGBL) delivered a 38.08% return in the past 3 months. 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.