Rowan Street Capital, an investment management company, released its first-half 2022 investor letter. A copy of the same can be downloaded here. At the end of the first half, the fund is 57% down. The second quarter contributed the majority of the fund’s decline, which was -41%. However, at the end of July 20, the fund was 19% up. For more information on the fund’s top picks in 2022, please check its top five holdings.
In the letter Rowan Street Capital discussed its major performance detractors like Meta Platforms, Inc. (NASDAQ:META). Meta Platforms, Inc. (NASDAQ:META) is a technology conglomerate headquartered in Menlo Park, California. The stock of Meta Platforms, Inc. (NASDAQ:META) closed at $178.34 per share on August 10, 2022. One-month return of Meta Platforms, Inc. (NASDAQ:META) rose to 12.84% and its shares lost 50.82% of their value over the last 52 weeks. Meta Platforms, Inc. (NASDAQ:META) has a market capitalization of $485.452 billion.
Here is what Rowan Street Capital specifically said about Meta Platforms, Inc. (NASDAQ:META):
“Now, there are valid concerns around Meta Platforms, Inc. (NASDAQ:META) business like competition from TikTok, Apple privacy update on iOS (reduced effectiveness of targeted ads), and heavy capital investments in the Metaverse (Reality Labs Division).
Meta’s revenue growth slowed to just 7% in recent quarter, and it ramped up its spending at the same time on new short videos for Facebook and Instagram, which could eventually widen its moat against TikTok; and its unprofitable Reality Labs segment, which produces its virtual reality (VR) and augmented reality (AR) devices. The combination of slowing sales and rising expenses spooked investors, and the bears were convinced that Meta’s high-growth days are over.
Combine that with the mounting macro concerns and a huge sell-off in growth stocks and we have Meta currently trading like a cyclical energy stock selling at just 14x this year’s earnings and 12x 2023 estimated earnings. In 2021, they generated $13.68 in free cash flow per share, which translates to ~10% free cash flow yield based on trailing numbers (obviously their cash flow can decline). On a price-to-sales basis, stock trading at just 3.6x (see below) — all-time low…” (Click here to read more)
Photo by Joshua Hoehne on Unsplash
Meta Platforms, Inc. (NASDAQ:META) is in 4th position on the list of 30 Most Popular Stocks Among Hedge Funds. As per our database, Meta Platforms, Inc. (NASDAQ:META) was held by 200 hedge fund portfolios at the end of the first quarter, which was 224 in the previous quarter.
We discussed Meta Platforms, Inc. (NASDAQ:META) in another article and shared the list of undervalued high free cash flow stocks to buy amid a recession. You can check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other prominent investors.
Disclosure: None. This article is originally published at Insider Monkey.