Is Vistra (VST) a Smart Long-Term Investment?

Legacy Ridge Capital, an asset management firm, published its “Partners Equity Fund” second-quarter 2022 investor letter – a copy of which can be downloaded here. The gross return for the fund in the first half of 2022 was 0.9%. Through May, the fund was up 19%, then the Federal Reserve raised interest rates 75bps instead of the initially expected 50bps and the bottom fell out. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Legacy Ridge Capital Partners Equity Fund mentioned Vistra Corp. (NYSE:VST) and explained its insights for the company. Founded in 2016, Vistra Corp. (NYSE:VST) is an Irving, Texas-based electricity generation company with a $10.6 billion market capitalization. Vistra Corp. (NYSE:VST) delivered a 12.12% return since the beginning of the year, while its 12-month returns are up by 41.75%. The stock closed at $25.53 per share on August 17, 2022.

Here is what Legacy Ridge Capital Partners Equity Fund has to say about Vistra Corp. (NYSE:VST) in its Q2 2022 investor letter:

“We had a hard time deciding which company we should discuss in this letter. By just about every metric, all our holdings are cheap from both a relative and absolute perspective – especially compared to the performance of commodity prices and the recent pullback in the overall complex of energy stocks. For the first six months of 2022, oil was up 41%, natural gas up 45%, natural gas liquids up 34%, and the futures curve for electricity (in the two biggest deregulated power markets) is up ~30%, but our holdings were only up a measly ~1% by mid-year! The point is all our positions are investment stories worth telling.

However, Vistra Corp stands out among the names we own. First, the market environment has improved materially over a multi-year basis, which will enhance VST’s ability to mint cash and at the same time underscores the longevity of VST’s asset base. Second, VST’s market value has remained flat, despite shrinking the share count by nearly 15% since adopting a transformational capital allocation strategy. The combination of those two factors results in ~50% more value in a VST share today than just six months ago.

The bottom line is that the discount to intrinsic value of VST’s equity has become more attractive than ever. To better understand the two broader points, as well as our heightened conviction, it’s worth providing a brief history of the IPPs and summarizing the original VST investment thesis…” (Click here to see the full text)


Our calculations show that Vistra Corp. (NYSE:VST) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Vistra Corp. (NYSE:VST) was in 40 hedge fund portfolios at the end of the second quarter of 2022, compared to 40 funds in the previous quarter. Vistra Corp. (NYSE:VST) delivered a 1.19% return in the past 3 months.

In July 2022, we published an article that includes Vistra Corp. (NYSE:VST) in 5 Best Stocks to Buy Now According to Billionaire Marc Lasry’s Avenue Capital. 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.