Lookback: Miller Value Partners 2019 RH (RH) Thesis

If you are looking for the best ideas for your portfolio you may want to consider some of Miller Value Partners top stock picks. Miller Value Partners, an investment management firm, is bullish on RH (NYSE:RH) stock. In its Opportunity Equity Q3 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on RH (NYSE:RH) stock. RH (NYSE:RH) is a retailer in the home furnishings marketplace.

On October 21, 2019, Miller Value Partners had released its Opportunity Equity Q3 2019 investor letter. The investment firm said that RH (NYSE:RH) was one of the biggest contributors to its performance in Q3 2019. RH (NYSE:RH) stock has posted a return of 119.1% in the trailing one year period, outperforming the S&P 500 Index which returned 15.1% in the same period. This suggests that the investment firm was right in its decision.

Miller Opportunity Equity fund posted a return of -1.81% in the third quarter of 2019, underperforming the S&P 500 Index which returned 1.70% in the same quarter. Let’s take a look at comments made by Miller Value Partners about RH (NYSE:RH) stock in the Q3 2019 investor letter.

“RH (RH) increased 47.8% over the quarter after reporting 2Q results above pre-announced results and raising full year guidance again. The company reported 2Q earnings per share (EPS) of $3.20 above preannounced EPS of $2.65-2.72 and consensus of $2.68. Total sales increased 9.9% to $706.5M above guidance of $696-699M and consensus of $694.9M. The company raised their full year EPS guidance again to $10.53-10.76 from preannouncement guidance $9.08-9.52 with total sales growth of 6.8%-7.3% up from 6-7% previously. The company announced the pricing of $300M 0% convertible notes due 2024 at a 25% conversion premium to a closing price of $169.12. The company entered into a hedge to limit earnings dilution as a result of the convertible note issuance up to a 100% premium of the stock’s price of $169.12.”


In Q2 2020, the number of bullish hedge fund positions on RH (NYSE:RH) stock increased by about 33% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in RH’s growth potential. Our calculations showed that RH (NYSE:RH) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.