Bernzott Capital Advisors recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of -32.76% (net) for the quarter, outperforming its benchmark, the Russell 2000 Value Index which returned -35.66% in the same quarter. You should check out Bernzott Capital Advisors top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.
In the said letter, Bernzott Capital Advisors highlighted a few stocks and Lendingtree Inc. (NASDAQ:TREE) is one of them. Lendingtree is the largest online lending marketplace. Year-to-date, TREE stock lost 24.8% and on May 12th it had a closing price of $242.55. Its market cap is of $2.98 billion. Here is what Bernzott Capital Advisors said:
“LendingTree (TREE): $2.6 billion market cap – Based in Charlotte, NC, the company operates an online marketplace for all types of consumer loans, including mortgage, home equity, auto, personal, and credit cards. TREE also offers a marketplace for all types of insurance and deposits, matching over 700 lenders with millions of consumers. TREE is not a balance sheet lender itself, thus assumes zero credit risk. TREE enjoys a ~31% share in its core market, generates strong margins and is led by an owner-operator CEO who is the second largest shareholder with 13% of the stock worth ~$500 million. The company is in the early stages of penetrating a large mortgage market opportunity, with room to grow from its current less than 2% of annual mortgage originations. TREE should to benefit from the secular shift by domestic financial services firms shifting ad spending to online. We initiated and then added to the position during the quarter, with the stock trading at an attractive discount to fair value.”
In Q4 2019, the number of bullish hedge fund positions on TREE stock increased by about 13% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with TREE’s upside potential.
Disclosure: None. This article is originally published at Insider Monkey.