Why Malibu Boats (MBUU) Stock is a Compelling Investment Case

Polen Capital Management recently released its Q3 2020 Investor Letter, a copy of which you can download here. During the third quarter of 2020, the Polen U.S. Small Company Growth Composite Portfolio returned 4.57% gross of fees, while the Russell 2000 Growth Index was up 7.17%. You should check out Polen Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Polen Capital highlighted a few stocks and Malibu Boats Inc. (NASDAQ:MBUU) is one of them. Malibu Boats Inc. (NASDAQ:MBUU) is the manufacturer of recreational boats. Year-to-date, Malibu Boats Inc. (NASDAQ:MBUU) stock gained 38.2% and on November 13th it had a closing price of $57.00. Here is what Polen Capital said:

“We also started a new position in Malibu Boats, a high-quality boat manufacturer, during the third quarter. We believe Malibu’s competitive advantage stems from the strength of its brand, which is renowned for premium performance and attention to quality within the boating and ski/wake sports industries.

Malibu’s products garner a premium price, have strong customer loyalty with high repeat purchases, and are widely recognized for their continued innovation, style, ease of use, and overall high performance.

In our view, management takes a very thoughtful and disciplined approach around every aspect of their business with a focus on driving long-term value creation. This includes how management reinvests back into Malibu’s brands as well as its approach to M&A. Malibu has successfully acquired two other leading boat brands. Each had a dominant position in their respective categories but were previously undermanaged as family-owned and operated businesses. The business has a highly variable cost structure, generates incredibly strong returns on investment, and has a dominant and growing market share with high brand loyalty.”

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In Q2 2020, the number of bullish hedge fund positions on Malibu Boats Inc. (NASDAQ:MBUU) stock increased by about 19% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in MBUU’s growth potential. Our calculations showed that Malibu Boats Inc. (NASDAQ:MBUU) 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

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