Greystone Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. During the fourth quarter of 2021, returns for separate accounts managed by Greystone Capital ranged from +3.6% to -14.5%. The median account return was -10.8%, net of fees. The median account return for the full year 2021 was +39.4%, net of fees. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Greystone Capital Management, in its Q4 2021 investor letter, mentioned Houghton Mifflin Harcourt Company (NASDAQ: HMHC) and discussed its stance on the firm. Houghton Mifflin Harcourt Company is a Boston, Massachusetts-based publishing company with a $2.3 billion market capitalization. HMHC delivered a 13.17% return since the beginning of the year, while its 12-month returns are up by 196.74%. The stock closed at $18.22 per share on February 09, 2022.
Here is what Greystone Capital Management has to say about Houghton Mifflin Harcourt Company in its Q4 2021 investor letter:
“During the quarter we entered into a core position in Houghton Mifflin Harcourt, a small cap education company undergoing a strategic business shift set to enhance their customer captivity, value prop and margin profile. Houghton Mifflin is a leading education and learning technology company that primarily services both students and teachers throughout K-12 school districts in the areas of core curriculum, supplemental services and professional learning services. Houghton Mifflin was founded in the early 1900s and there are most likely few readers of this letter who don’t recognize the name from your time as a student. During the past few decades, HMHC has become an industry juggernaut, with their core curriculum products of math, science and reading penetrating over 90% of K-12 elementary schools, reaching 56 million students annually. Their education business consists of Core curriculum offerings in which they have 30% market share as part of an oligopoly, as well as the faster growing Extensions business which consists of supplemental materials, professional learning services, and intervention programs for students in need of extra learning support. Due to their scale, resources and investment in technology, Houghton Mifflin offers the most comprehensive and results-driven solutions across the elementary landscape. While the core business is strong, the most attractive aspect of this investment is HMHC’s digital efforts as well as their extensions offerings which suggest additional opportunities for growth at very high incremental margins as they increase their penetration of annual education material spend.
Despite shares rising significantly since their COVID lows, I believe HMHC is being categorized (and valued) as a slow growing unprofitable cyclical with a poor history of value creation. Reality suggests that HMHC is a dominant cash generative business currently at an inflection point, with a new streamlined cost structure capable of delivering strong fundamentals through all cycles. I believe poor trailing financials, the nature of education spending tied to state adoption cycles, not-so-straightforward accounting related to digital product sales, and COVID related impact on the education world has provided an interesting investment setup with the opportunity to purchase shares at a very favorable price…” (Click here to see the full text)
Finance, Investments
Our calculations show that Houghton Mifflin Harcourt Company (NASDAQ: HMHC) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. HMHC was in 27 hedge fund portfolios at the end of the third quarter of 2021, compared to 21 funds in the previous quarter. Houghton Mifflin Harcourt Company (NASDAQ: HMHC) delivered a 10.56% return in the past 3 months.
In July 2021, we also shared another hedge fund’s views on HMHC in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.