Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Quest Resource Holding Corporation (QRHC): Long Cast Advisors Expects Many Improvements

In a recently published Long Cast Advisors‘ Q1 2019 Investor Letter (download it here), this asset management firm shared its views on several companies in its portfolio. Among those companies was Quest Resource Holding Corporation (NASDAQ:QRHC), for which the fund wrote:

Also in 1Q19, QRHC announced a significant and material change in ownership that I think widens and lengthens its long-term success pathway. Through an agreement announced during the quarter, and a stock offering completed just after, the company will soon have a new Chairman –Dan Friedberg -who has a history of engagement towards operating improvement at business services companies such as this.(I’ve shared my due diligence on him here.)

The plan is for Friedberg to acquire 11% of the company from the current Chairman at a price of $2 / share(!!). Concurrently, the old Chairman and two additional uninterested insiders (all dead weight) have sold 4.3M shares (out of a total of 15M outstanding) in an offering through Roth capital markets at $1.50 / share. Friedberg will then control the Board.

If you wonder what LCA process might have contributed to changes at QRHC, I’d refer you to the link below, where I posted all 15 un-answered correspondences I sent to its CEO or Chairman since Autumn 2017. I like to think that the opportunity I offered the CEO and Chairman to dwell on their shortcomings may have inspired some change.

I imagine Friedberg (and others) see what I see here, not only how the business is today, but where it could be. The current management team has turned QRHC to profitability and cash flow. Yes, they’ve made mistakes, but who doesn’t? They seem to be learning from them.

With more support by an engaged and intelligent Board that can help management fill its holes, there appears a clearer path to creating value over time for customers, employees and shareholders. And with the stock trading at less than 0.3x sales, and a new Board soon to be in place, I think the long-term opportunity to compound has dramatically improved.

money growing, ilustrativr, design, investment, savings, tree, loan, profit, concept, wealth, business

Fer Gregory/Shutterstock.com

At Q4’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in QRHC a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably  (or already accumulated large positions).

QRHC

Quest Resource Holding Corporations is the holding company for Quest Resource Management Group which provides a variety of professional corporate sustainability solutions for reducing waste, improving profitability, attaining new customers, etc. Since the beginning of the year, the company’s stock gained 46.43%, having a closing price of $2.05 on April 16th.

Disclosure: None.

This article is originally published at Insider Monkey.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...