Long Cast Advisers: “High Leverage Caused the Equity Valuations of QRHC to Decline”

Independent Investment management company Long Cast Advisers recently released its second-quarter 2022 investor letter. A copy of the same can be downloaded here. The fund is concentrated on long-term investment in small-cap companies. In the second quarter, the fund’s cumulative returns dropped 15%, which resulted in a 26% decline in the year-to-date returns. The most significant holdings of the portfolio underperformed and led to portfolio decline. For more information on the fund’s top picks in 2022, please check its top five holdings.

Long Cast Advisers mentioned Quest Resource Holding Corporation (NASDAQ:QRHC) in the letter and discussed its views about the company. Quest Resource Holding Corporation (NASDAQ:QRHC) is a waste management company, based in The Colony, Texas. It has a market capitalization of  $114.573 million. The stock of Quest Resource Holding Corporation (NASDAQ:QRHC) closed at $6.01 per share on August 16, 2022. One-month return of Quest Resource Holding Corporation (NASDAQ:QRHC) was 44.47%, while its shares lost 5.06% of their value over the last 52 weeks.

Here’s what Long Cast Advisor specifically said about Quest Resource Holding Corporation (NASDAQ:QRHC)  in its Q2 2022 investor letter:

“Quest Resource Holding Corporation (NASDAQ:QRHC) borrowed heavily to purchase Rome RWS, Inc., and with results from the acquired company not yet fully on the income statement, the debt ratios expanded and equity valuations declined. Management – and really the Board – is undertaking a high skill maneuver of integrating its largest acquisition to date, carrying an unprecedented level of debt all concurrent with the long planned retirement of the long tenured CFO. It’s a little more exciting than necessary but the valuation is undemanding and the opportunity set quite large.

Since I’ve long written about what this company could look like if it leaned more deeply into utilizing technology within its two-sided marketplace, I’ll be closely following the XPO Logistics (XPO) spinoff of the truck brokerage business, expected in 4Q22. Truck and waste brokerage share some similar dynamics and as I’ve long noted, the technologist at XPO worked at Oakleaf concurrent with QRHC CEO Ray Hatch. Technology was a big enabling factor at Oakleaf and in XPO’s +10x growth. I think it would have a similar function for QRHC were management to wisely invest time and resources in its development.”

Sandra Cunningham/Shutterstock.com

Quest Resource Holding Corporation (NASDAQ:QRHC)  is not on the list of  30 Most Popular Stocks Among Hedge Funds. Per our database, Quest Resource Holding Corporation (NASDAQ:QRHC) was held by 7 hedge fund portfolios at the end of the first quarter, and 8 in the previous quarter.

We discussed Quest Resource Holding Corporation (NASDAQ:QRHC) in another article and shared Long Cast Advisers’ views on the company in the last year. For more investor letters from hedge funds and other prominent investors, you can check our hedge fund investor letters Q2 2022 page.

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

Related posts

Advisors in Focus- January 6, 2021

Gavin Maguire

Advisors in Focus- February 15, 2021

Gavin Maguire

Advisors in Focus- February 22, 2021

Gavin Maguire

Advisors in Focus- February 28, 2021

Gavin Maguire

Advisors in Focus- March 18, 2021

Gavin Maguire

Advisors in Focus- March 21, 2021

Gavin Maguire