Is World Fuel Services Corp. (INT) A Smart Long-Term Buy?

Bernzott Capital Advisors, an investment management firm, published its fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 24.41% was recorded by the fund in the fourth quarter of 2020, below its  R2000V and R2500V benchmarks that delivered a 33.36% and 28.51% return respectively in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Bernzott Capital Advisors, in their Q4 2020 investor letter, mentioned World Fuel Services Corporation (NYSE: INT) and emphasized their views on the company. World Fuel Services Corporation is a Miami, Florida-based energy company that currently has a $2.1 billion market capitalization. Since the beginning of the year, INT delivered a 7.16% return, extending its 12-month gains to 43.98%. As of March 23, 2021, the stock closed at $33.39 per share.

Here is what Bernzott Capital Advisors has to say about World Fuel Services Corporation in their Q4 2020 investor letter:

“World Fuel Services (INT): A distributor of transportation fuels in aviation, land and marine markets, INT has unsurprisingly experienced weakness in 2020 but is set to return to mid-teens ROIC from current single digit levels, and the stock should appreciate as this occurs. The stock is an economic reopening beneficiary. Meanwhile, the company should see payoff from its inward focus in the recent couple years on integrating prior acquisitions, cost reduction, and “high-grading” its business, reducing low margin activities. Its balance sheet is its strongest in a decade, now in a net cash position after significant counter-cyclical free cash flow generation, and M&A activity may resume, a positive. The stock’s valuation is below historical levels.”

Our calculations show that World Fuel Services Corporation (NYSE: INT) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, World Fuel Services Corporation was in 18 hedge fund portfolios, compared to 16 funds in the third quarter. INT delivered a 7.64% return in the past 3 months.