Why Covetrus (CVET) Stock is a Compelling Investment Case

On July 14, 2020, Silver Ring Value Partners LP released its Q2 2020 Investor Letter, a copy of which you can download here. The investment firm was founded in 2016 by Chief Investment Officer and Managing Partner Gary Mishuris. In its Q2 2020 Investor Letter, Silver Ring Value Partners LP reported 14 investments with a 5.0% cash level and a 78% option-adjusted net exposure. At the end of the quarter, the fund reached a 54% price to base case value estimate. You should check out Silver Ring Value Partners’ 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, Silver Ring Value Partners highlighted a few stocks and Covetrus Inc. (NASDAQ:CVET) is one of them. Covetrus Inc. (NASDAQ:CVET) is a global leader in animal-health technology and services. Year-to-date, Covetrus Inc. (NASDAQ:CVET) stock gained 60.5% and on July 14th it had a closing price of $20.18. Here is what Silver Ring Value Partners said:

“In the depths of the March/April sell-off I was able to add a large number of shares to our CVET position in the $5-$6 price range. This was less than either of the two businesses within the company are worth and a small fraction of my $28 base case value estimate. When the stock tripled quickly and became a very large part of the portfolio I began gradually reducing the position in order to comply with my risk management parameters on position sizing. I did so reluctantly since I think the business is still substantially undervalued and the company remains our largest position.

I have recently presented CVET at the MOI Global Wide Moat 2020 conference, and you can view the presentation here. I am also enclosing the slide deck covering my thesis on the company indepth and detailing the time of all portfolio activity through the end of Q2 pertaining to CVET so that you can see exactly how and why I made the decisions that I did.”

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In Q1 2020, the number of bullish hedge fund positions on Covetrus Inc. (NASDAQ:CVET) stock increased by about 10% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Covetrus’s upside potential. Our calculations showed that Covetrus Inc. (NASDAQ:CVET) 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. 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.