Voss Capital, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. In Q4 2021, the Voss Value Fund, LP and the Voss Value Offshore Fund, Ltd., returned +13.6% and +14.3% to investors net of fees and expenses, respectively, compared to +2.1% total return for the Russell 2000, +3.9% price return for the Russell 2000 Value, and +11.0% total return for the S&P 500. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Voss Capital, in its Q4 2021 investor letter, mentioned ArcelorMittal S.A. (NYSE:MT) and discussed its stance on the firm. Founded in 1966, ArcelorMittal S.A. (NYSE:MT) is a Luxembourg, Luxembourg-based steel production company with a $30.6 billion market capitalization, and is currently spearheaded by its CEO, Lakshmi Mittal. ArcelorMittal S.A. (NYSE:MT) delivered a 5.72% return since the beginning of the year, while its 12-month returns are up by 28.44%. The stock closed at $33.65 per share on March 22, 2022.
Here is what Voss Capital has to say about ArcelorMittal S.A. (NYSE:MT) in its Q4 2021 investor letter:
“ArcelorMittal is a global integrated steel producer trading at around 2x EBITDA which will likely generate over 50% of their market cap in free cash flow in the next 8-10 quarters. This is after a period of substantial deleveraging which now allows the company to use FCF primarily towards share buybacks. We also believe the company’s numerous joint ventures have an underappreciated $10+ billion of value. When accounting for this, we believe MT is even cheaper on a price/tangible book basis (~0.4x).
If the company can simply maintain its multiple while returning most, if not all, that FCF to shareholders in the form of buybacks, we believe 50%+ upside is conservative. Given the company’s deleveraged balance sheet, even if steel pricing and profitability decline materially, we believe the downside will be limited as historically MT trades in a range of 5-7x EBITDA versus the current 2x. “
Our calculations show that ArcelorMittal S.A. (NYSE:MT) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. ArcelorMittal S.A. (NYSE:MT) was in 63 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 71 funds in the previous quarter. ArcelorMittal S.A. (NYSE:MT) delivered a 2.44% return in the past 3 months.
In November 2021, we published an article that includes ArcelorMittal S.A. (NYSE:MT) in the 10 Best Basic Material Stocks to Buy Now. You can find more than 100 investor 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.
