Maran Capital, an investment management firm led by Dan Roller, has a bullish viewpoint on Turning Point Brands Inc (NYSE:TPB). The investor believes that the company’s share price would move up in the coming year. Roller, who is founder and chief investment officer of Maran Capital, noted in the Q4 investor letter (you can download a copy here) that his 2020 price target range for Turning Point Brands’ stock is $30-40 per share, while shares are currently trading at around $20.44. In this article, we’re going to discuss Turning Point Brands – a provider of other tobacco products in the United States – and will take a look at Rolle’s comments about the company.
So, here is what Roller said about Turning Point Brands in the letter:
Sometimes smaller-cap and less liquid stocks behave in unexpected ways (which is part of their appeal to me – one seller wanting to exit a position can trump fundamentals in the short term, creating opportunities). This seemed to be the case with TPB following its 3Q earnings release. I believed the results, including the initiation of a dividend, were positive. Despite this, the stock sold off in the days following the release of results, to a low of ~$15.50/sh (perhaps one seller just wanted out). Regardless of the cause of the weakness, I took advantage, and added to the position during this period. Again, this is somewhat illiquid, so any subsequent strength into year-end could easily be attributed to “one buyer wanting to get in.” Short-term aberrations in either direction aside, I believe that TPB increased in value over the course of 2017, and is likely to continue to compound at acceptable rates over the long term. As a reminder, my 2020 price target range is $30-40/sh.
Website Screenshot/Turning Point Brands
Louisville, Kentucky-based Turning Point Brands Inc (NYSE:TPB) is a top player in the other tobacco products industry. The $392.65-million market cap company operates three smokeless products, smoking products and NewGen products. Its brands include Zig-Zag, Beech-Nut, Stoker’s, Trophy, and VaporBeast. As of the end of the fourth quarter of 2017, there were five hedge funds in Insider Monkey’s database with positions in TPB.
Turning Point Brands had an impressive performance on the stock market in 2017, with the share price gaining nearly 73%. Shares are down 3.27% so far this year, while the stock has jumped 55.32% over the last 12 months.
For the third quarter ended September 30, 2017, the company reported net sales of about $73 million, up compared to about $51 million in the same quarter the year before. Its net income was $7.4 million, or $0.38 earnings per share, versus $6.8 million, or $0.34 per share, in the third quarter of 2016.
Before you make your next trade, you’ll want to know this.
Insider Monkey keeps track of top-rated corporate insiders and best performing hedge funds and the stocks they buy on a daily basis.
Our team has identified the five stocks that insiders and hedge funds are quietly accumulating before the broader market catches on… and none of the usual big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now…
Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. He launched his hedge fund in 1956 with $105,100 in seed capital. Back then they weren’t called hedge funds, they were called “partnerships”. Warren Buffett took 25% of all returns in excess of 6 percent.
For example S&P 500 Index returned 43.4% in 1958. If Warren Buffett’s hedge fund didn’t generate any outperformance (i.e. secretly invested like a closet index fund), Warren Buffett would have pocketed a quarter of the 37.4% excess return. That would have been 9.35% in hedge fund “fees”.
Actually Warren Buffett failed to beat the S&P 500 Index in 1958, returned only 40.9% and pocketed 8.7 percentage of it as “fees”. His investors didn’t mind that he underperformed the market in 1958 because he beat the market by a large margin in 1957. That year Buffett’s hedge fund returned 10.4% and Buffett took only 1.1 percentage points of that as “fees”. S&P 500 Index lost 10.8% in 1957, so Buffett’s investors actually thrilled to beat the market by 20.1 percentage points in 1957.
Between 1957 and 1966 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. An investor who invested $10,000 in Warren Buffett’s hedge fund at the beginning of 1957 saw his capital turn into $103,000 before fees and $64,100 after fees (this means Warren Buffett made more than $36,000 in fees from this investor).
As you can guess, Warren Buffett’s #1 wealth building strategy is to generate high returns in the 20% to 30% range.
We see several investors trying to strike it rich in options market by risking their entire savings. You can get rich by returning 20% per year and compounding that for several years. Warren Buffett has been investing and compounding for at least 65 years.
So, how did Warren Buffett manage to generate high returns and beat the market?
In a free sample issue of our monthly newsletter we analyzed Warren Buffett’s stock picks covering the 1999-2017 period and identified the best performing stocks in Warren Buffett’s portfolio. This is basically a recipe to generate better returns than Warren Buffett is achieving himself.
You can enter your email below to get our FREE report. In the same report you can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12-24 months. We initially share this idea in October 2018 and the stock already returned more than 150%. We still like this investment.
Free Report Reveals
Warren Buffet's Secret Recipe
Our Price: $199FREE
We may use your email to send marketing emails about our services. Click here to read our privacy policy.
