Palm Valley Capital: “We Sold TreeHouse Foods (THS) for a Small Gain”

Palm Valley Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio return of 0.04% was recorded by the fund for the fourth quarter of 2021, while its benchmarks, the S&P SmallCap 600 Index, by comparison, returned 5.59% and 3.72% return for the Morningstar Small Cap Index over the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Palm Valley Capital Management, in its Q4 2021 investor letter, mentioned TreeHouse Foods, Inc. (NYSE: THS) and discussed its stance on the firm. TreeHouse Foods, Inc. is an Oak Brook, Illinois-based multinational food processing company with a $2.4 billion market capitalization. THS delivered a 6.51% return since the beginning of the year, while its 12-month returns are up by 11.98%. The stock closed at $43.17 per share on January 10, 2022.

Here is what Palm Valley Capital Management has to say about TreeHouse Foods, Inc. in its Q4 2021 investor letter:

“During the quarter we sold TreeHouse Foods (ticker: THS). In November, TreeHouse Foods revised its earnings and free cash flow forecast well below our estimates. Food companies continue to struggle in the current inflationary environment. While we believe TreeHouse will eventually succeed in passing on rising costs, we determined our initial normalized free cash flow estimate was too optimistic. The reduction in cash flow will also limit efforts to deleverage. After revising our assumptions, our valuation of TreeHouse declined below its stock price. We sold the position for a small gain.”

Based on our calculations, TreeHouse Foods, Inc. (NYSE: THS) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. TreeHouse Foods, Inc. (NYSE: THS) delivered an 8.85% return in the past 3 months.

In October 2021, we also shared another hedge fund’s views on THS in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

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