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Why One Group Hospitality (STKS) Stock is a Compelling Investment Case

Horos Asset Management recently released its Q2 2020 Investor Letter, a copy of which you can download here. The investment firms portfolios have not been immune to this recovery, with Horos Value Internacional posting a 16.0% return in the second quarter in line with the 16.5% rise of its benchmark index, and Horos Value Iberia returning 14.1%, above the 8.5% of its benchmark index. You should check out Horos Asset Management’s 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, Horos Asset Management highlighted a few stocks and One Group Hospitality Inc. (NASDAQ:STKS) is one of them. One Group Hospitality Inc. (NASDAQ:STKS) is a global hospitality company. Year-to-date, One Group Hospitality Inc. (NASDAQ:STKS) stock lost 40.4% and on September 11th it had a closing price of $2.00. Here is what Horos Asset Management said:

“The ONE Group Hospitality (“ONE”) controls, develops, manages and franchises high-end restaurants in the United States. In addition, the company provides turnkey food and beverage solutions to luxury hotels, casinos and other premium locations. Specifically, ONE has three lines of business: STK (“Steakhouse”) restaurants, Kona Grill restaurants and ONE Hospitality Services.

As a result of poor business management, ONE’s stock market performance remained poor from its IPO in 2013 until 2017, when the company’s CEO changed, with Emanuel “Manny” Hilario joining the company and Jonathan Segal, cofounder of ONE and owner of 25% of the shares, becoming Chairman. Manny Hilario brings his extensive experience in managing restaurant companies and, since his arrival, has taken important steps to improve the management and profitability of the business: closing less profitable restaurants, acquiring Kona Grill at very attractive prices or strengthening the licensing model, which is less capital intensive.

All these changes allowed the company to recover the path of like-for-like sales growth and generate positive cash flow, which resulted in a strong rise in the stock price of more than 230% from the end of 2017 until February this year, when the coronavirus pandemic has had the consequences we all know and has led ONE’s shares to all-time lows.

In our opinion, despite the fact that the next few months are highly uncertain, the company has the financial capacity to withstand this environment and has laid the foundations for solid revenue growth and cash generation for the coming years. This longer-term vision allowed us to invest in ONE at extremely attractive prices.”

Ryman Hospitality RHP Gaylord Luxury Hotel

Jon Bilous / Shutterstock.com

Our calculations showed that One Group Hospitality Inc. (NASDAQ:STKS) 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 leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. 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.