Kinsman Oak Capital Partners, an investment management firm, published its “Kinsman Oak Equity Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly return of 2.7% was delivered by the fund for the Q2 of 2021, trailing its benchmarks, the S&P 500 Index, which delivered an 8.6% return, the Russell 2000 Index with a 4.3% return, and the TSX Composite Index that had a 10.2% gain for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
In the Q2 2021 investor letter of Kinsman Oak Capital Partners, the fund mentioned Turning Point Brands, Inc. (NYSE: TPB) and discussed its stance on the firm. Turning Point Brands, Inc. is a Louisville, Kentucky-based tobacco company with a $930.4 million market capitalization. TPB delivered a 10.33% return since the beginning of the year, extending its 12-month returns to 72.39%. The stock closed at $48.16 per share on August 24, 2021.
Here is what Kinsman Oak Capital Partners has to say about Turning Point Brands, Inc. in its Q2 2021 investor letter:
“TPB continues to be a volatile stock, but business execution has been admirable since we first initiated our position. The company has put forth consecutive beat and raise quarters, announced a few tuck-in acquisitions, and recently promoted a new CFO. We view these developments as positives for the stock. We believe TPB remains undervalued at ~14x FY22 EPS and ~10x FY22 EBITDA.”
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Based on our calculations, Turning Point Brands, Inc. (NYSE: TPB) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. TPB was in 30 hedge fund portfolios at the end of the first half of 2021, compared to 25 funds in the previous quarter. Turning Point Brands, Inc. (NYSE: TPB) delivered a 12.69% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
