Seth Klarman’s Value Stock Portfolio Performance in 2021: 5 Best Picks

4. International Flavors & Fragrances Inc. (NYSE:IFF)

Number of Hedge Fund Holders: 46 

Gain in Share Price in 2021: 42%       

Baupost Group was one of several hedge funds that bet on International Flavors & Fragrances Inc. (NYSE:IFF) to deliver solid returns as the economy reopened. Klarman bought a stake in the company in the first quarter of 2021 consisting of over 2 million shares. Although the hedge fund reduced this position by almost half in the third quarter, it still owns over 1 million shares in International Flavors & Fragrances Inc. (NYSE:IFF) worth $166 million. 

International Flavors & Fragrances Inc. (NYSE:IFF) is among the top performing value stocks of 2021 and several hedge funds are bullish on the company for 2022 as well. At the end of the third quarter of 2021, 46 hedge funds in the database of Insider Monkey held stakes worth $2.8 billion in International Flavors & Fragrances Inc. (NYSE:IFF). 

In its Q1 2021 investor letter, Rhizome Partners, an asset management firm, highlighted a few stocks and International Flavors & Fragrances Inc. (NYSE:IFF) was one of them. Here is what the fund said:

“We are still getting used to the higher multiples that investors will pay for larger market cap and pure play companies such as  IFF. We do understand the market’s rationale. IFF’s products account for a small percentage of the customers’ cost while playing critical roles in the products’ performance. With some operating leverage, the company can probably grow FCF at 4-6% a year. This brings the total return close to the long-term return of the S&P 500 index of 10%. Through trial and error, we have come to appreciate how scale, higher market share, route densities, switching costs, and collaborative relationships amongst major industry players can contribute to sustained high returns on invested capital.”