Deep Sail Capital, an investment management company, released its second quarter 2023 investor letter. A copy of the same can be downloaded here. In the second quarter, the fund returned 3% net of fees while averaging 78% net long exposure. As of June 2023, the fund’s net return was 21.3% while averaging 76% net long exposure. The fund underperformed its benchmarks, the Russell 2000 Index and the Russell Mid Cap Growth Index, in the second quarter by 2.2% and 3.2%, respectively. The fund continued to outperform its benchmarks so far this year, while the short portfolio underperformed during the second quarter. You can check the top 5 holdings of the fund to know its best picks in 2023.
Deep Sail Capital highlighted stocks like RCM Technologies, Inc. (NASDAQ:RCMT) in the second quarter 2023 investor letter. Headquartered in Pennsauken, New Jersey, RCM Technologies, Inc. (NASDAQ:RCMT) offers business and technology solutions that operate through Engineering, Specialty Health Care, and Life Sciences and Information Technology. On July 26, 2023, RCM Technologies, Inc. (NASDAQ:RCMT) stock closed at $19.69 per share. One-month return of RCM Technologies, Inc. (NASDAQ:RCMT) was 6.78%, and its shares gained 17.55% of their value over the last 52 weeks. RCM Technologies, Inc. (NASDAQ:RCMT) has a market capitalization of $162.823 million.
Deep Sail Capital made the following comment about RCM Technologies, Inc. (NASDAQ:RCMT) in its second quarter 2023 investor letter:
“RCM Technologies, Inc. (NASDAQ:RCMT) is a diversified talent services holding company. The company operates in three segments: healthcare, Life Sciences and Information Technology (LS&IT), and Engineering. The company has a strong history of high-quality capital allocation, including smart M&A and opportunistic share buybacks. Recent commentary from the Q1 earnings call suggests that their Engineering business has built a backlog for 2023 that will materialize in future quarters.
After their 4Q earnings back in March, they noted “Material Weaknesses in Internal Control Over Financial Reporting” which caused the stock to drop 30%. I spoke with their CFO, Kevin Miller, about this after they submitted the filing. Kevin noted that the material weakness identified was related to their use of a third-party consultant to assist with the creation and ongoing development of their SAP accounting system. This work allowed those third-party consultants access to their accounting system, which is what caused the auditors to note a Material Weakness in Internal Controls. This came up during their most recent audit in 2022, and they are in the process of rectifying it in 2023, as they laid out in the 10-K. Currently, it is projected to be rectified in 2Q or 3Q of 2023. It seems highly unlikely that any material misstatements of their financials were made, and this material weakness should be resolved later this year with no impact on their financials…” (Click here to read the full text)
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RCM Technologies, Inc. (NASDAQ:RCMT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 5 hedge fund portfolios held RCM Technologies, Inc. (NASDAQ:RCMT) at the end of first quarter which was 6 in the previous quarter.
We discussed RCM Technologies, Inc. (NASDAQ:RCMT) in another article and shared Deep Sail Capital’s insights on the company. In addition, please check out our hedge fund investor letters Q2 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
