Turning Point Brands (TPB) Captivates Charming Projections

Maran Capital Management LLC, a value-driven, concentrated, long-term investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A return of 14.8% was recorded by the fund for the Q4 of 2020, outperforming its S&P 500 benchmark that delivered a 12.15% return, but below its Russell 2000 index that returned 31.4%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Maran Capital Management, in their Q4 2020 Investor Letter said that they continue to hold their position in Turning Point Brands, Inc. (NYSE: TPB) because of the positive projections made by the company. Turning Point Brands, Inc. is a company that distributes and manufactures branded consumer products, and has a $969.8 million market cap. For the past 3 months, TPB delivered a decent 39% return and settled at $50.61 per share at the closing of February 2nd.

Here is what Maran Capital Management has to say about Turning Point Brands, Inc. in their investor letter:

“Turning Point Brands, a branded consumer products company executing a buy and build strategy, has been a holding of the partnership on and off for the past four years. TPB is focused on “active ingredients,” such as nicotine (including tobacco-based and non-tobacco variants, but not cigarettes), caffeine, CBD, and more. Their Zig Zag brand dates back over 150 years and is the top-selling rolling paper brand globally. I don’t believe we are paying anything for the option, but if cannabis is legalized at the federal level in the US, Zig Zag could see a step-change in its growth. I love these types of situations. I’ve underwritten TPB based on its “boring” legacy businesses, but there is a lot of upside in its “new gen” segment (vaping, CBD, other active ingredients), as well as the potential for a real acceleration in Zig Zag’s growth under various scenarios.

A few months ago, I had the pleasure of interviewing Larry Wexler and Bobby Lavan, the CEO and CFO of Turning Point Brands, respectively, at the Casulo Buyside Fireside, hosted by Shai Dardashti. We discussed why they are so excited about the opportunities ahead at TPB, the significant optionality embedded in the company, the fact that the company was one of the few to increase its share buyback authorization last March (and act on it), how management targets a 17.5%+ ROIC on all capital allocation decisions, and the growth prospects across all three of the company’s major portfolio segments.”

Pixabay/Public Domain

TPB delivered a commendable 134.09% return in the past 12 months. However, our calculations show that Turning Point Brands, Inc. (NYSE: TPB) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 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

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Disclosure: None. This article is originally published at Insider Monkey.