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Should Investors Buy the Dip in Scorpio Bulkers (SALT) Stock?

Evermore Global Advisors recently released its Q2 2020 Investor Letter, a copy of which you can download here. The Evermore Global Value Fund posted a return of 10.35% for the quarter, underperforming its benchmarks, the MSCI All Country World Index ex USA (MSCI ACWI ex USA), the MSCI All Country World Index (MSCI ACWI), and the Morningstar World Small/Mid Stock Category Average. You should check out Evermore Global Advisors’ top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Evermore Global Advisors’ highlighted a few stocks and Scorpio Bulkers Inc. (NYSE:SALT) is one of them. Scorpio Bulkers Inc. (NYSE:SALT) is a shipping company. Year-to-date, Scorpio Bulkers Inc. (NYSE:SALT) stock lost 77.4% and on July 31st it had a closing price of $14.66. Here is what Evermore Global Advisors’ said:

“Scorpio Bulkers (SALT US), a dry bulk cargo operator, was the third largest detractor to Fund during the quarter. The most notable news occurred in June when the company raised $76 million of additional equity. While an equity raise was not a dire necessity in our view, Scorpio Bulkers wanted to establish a strong liquidity runway and flexibility well into 2023 (at current depressed levels) in case there is a prolonged recovery from COVID-19. With this cash raise, SALT boosted its liquidity position to over $200 million, of which $180 million is in cash and its residual stake in Scorpio Tankers. We believe the equity injection should allow SALT to refinance its debt and prepay some of its scheduled amortization, which in turn should help to negotiate future debt amortization relief from a position of strength. Management and insiders participated in the deal (at the same terms) and contributed to 20% of the equity raise.”

Sheila Fitzgerald/Shutterstock.com

In Q1 2020, the number of bullish hedge fund positions on Scorpio Bulkers Inc. (NYSE:SALT)  stock decreased by about 36% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Scorpio Bulkers’ growth potential. Our calculations showed that Scorpio Bulkers Inc. (NYSE:SALT) 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 scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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.