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Quest Resource (QRHC) Has Fallen 21% in Last One Year, Underperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of Long Cast Advisers top stock picks. Long Cast Advisers, an investment management firm, is bullish on Quest Resource Holding Corp (NASDAQ:QRHC) stock. In its Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Quest Resource Holding Corp (NASDAQ:QRHC) stock. Quest Resource Holding Corp (NASDAQ:QRHC) engages in the provision of reuse, recycling, and disposal services.

In July 2019, Long Cast Advisers had released its Q2 2019 investor letter. The investment firm said that Quest Resource Holding Corp (NASDAQ:QRHC) stock was the largest contributor to Q2 2019 returns. Quest Resource Holding Corp (NASDAQ:QRHC) stock has posted a return of -21.1% in the trailing one year period, underperforming the S&P 500 Index which returned 12.6% in the same period. This suggests that the investment firm was wrong in its decision. On a year-to-date basis, Quest Resource Holding Corp (NASDAQ:QRHC) stock has fallen by 11.0%.

In Q2 2019 investor letter, Long Cast Advisers said the fund posted a return of 1.0% in the second quarter of 2019, underperforming fund’s benchmark the S&P 500 Index which returned 4.3% in the same period. Let’s take a look at comments made by Long Cast Advisers about Quest Resource Holding Corp (NASDAQ:QRHC) stock in the Q2 2019 investor letter.

“QRHC was the largest contributor to 2Q19 returns. It likely benefitted from the “halo effect” of a new Chairman Dan Friedberg who (among other things) bought stock at $2 / share, a then premium to the market price. Freidberg wrote an inaugural shareholder letter that is worth the time to read.

Going forward, sustainable appreciation in the company’s intrinsic value will have to be driven by growth, cash flow and reinvestment at high rates. As demonstrated by the various letters I’ve written and published, I am frustrated by the lack of growth and the slow crawl towards profitability. Perhaps I’ll be proven wrong but I am doubtful we have the right CEO or CFO for the job.

We own this company however, b/c the business has solid attributes and with the right nurturing can be very profitable. Hopefully, the new Chairman will see what I see, conduct his own interviews of exiting employees (there are quite a few, and I’ve done my own) and then fix the problems, which are all solvable.

I’ll reiterate yet again that the biggest problem I see, and the one that if solved would most widen the opportunity pathway, is implementing a scalable technology platform. I’ve talked to executives in the waste brokerage industry and it doesn’t take a lot of money to achieve this if you have the right people with the right intentions who know what they’re doing. Alas, the inverse, makes scale impossible.

A logistics business is generally comprised of a robust technology platform + a sales team. Having one without the other is like going to the beach without a towel. Hopefully, with this new Chairman, there is at least a lifeguard on duty.”

Dmitry Kalinovsky/Shutterstock.com

In Q1 2020, the number of bullish hedge fund positions on Quest Resource Holding Corp (NASDAQ:QRHC) stock decreased by about 29% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Quest’s growth potential. Our calculations showed that Quest Resource Holding Corp (NASDAQ:QRHC) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 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

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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

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