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 Servicemaster Global Holdings Inc (NYSE:SERV) is one of them. Servicemaster provides residential and commercial services. Year-to-date, SERV stock lost 32.6% and on May 13th it had a closing price of $26.13. Its market cap is of $3.43 billion. Here is what Bernzott Capital Advisors said:
“ServiceMaster (SERV): $3.8 billion market cap – Based in Memphis, TN, the company is a leading provider of essential services to residential and commercial customers in the termite, pest control, cleaning and restoration markets, operating through an extensive service network of more than 8,000 company‑ owned locations and franchisees and licensees. Characteristics include: the business is recession-proof (2008-2009 revenue was grew 2.2% in 2008-2009); strong retention rates near 80%; and pricing power, increases of 1% to 2% annually. SERV has strong ~20% EBITDA margins, is capital light, and generates significant FCF. 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 SERV stock increased by about 45% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with SERV’s upside potential.
Disclosure: None. This article is originally published at Insider Monkey.