Investment management company Cove Street Capital recently released its “Small Cap Value Fund” third quarter 2022 investor letter. A copy of the same can be downloaded here. In the third quarter, the fund returned -5.15% compared to -2.19% for the Russell 2000 Index and -4.61% for the Russell 2000 Value Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Cove Street Capital highlighted stocks like Ecovyst Inc. (NYSE:ECVT) in its third-quarter investor letter. Headquartered in Malvern, Pennsylvania, Ecovyst Inc. (NYSE:ECVT) is a US-based catalyst and services provider. On November 25, 2022, Ecovyst Inc. (NYSE:ECVT) stock closed at $9.10 per share. One-month return of Ecovyst Inc. (NYSE:ECVT) was -8.54%, and its shares lost 6.86% of their value over the last 52 weeks. Ecovyst Inc. (NYSE:ECVT) has a market capitalization of $1.185 billion.
Cove Street Capital made the following comment about Ecovyst Inc. (NYSE:ECVT) in its Q3 2022 investor letter:
“We started investing in Ecovyst Inc. (NYSE:ECVT) in 2020, when the company was called PQG. At the time, PQG was trading at 8x EBITDA for a mix of specialty chemicals businesses that research suggested should be trading at 8x to 15x EBITDA, the average being “12-ish.” A divestiture program was subsequently announced: sell the closer to 8x EBITDA assets, and keep the higher margin businesses, including Silica Catalysts, Ecoservices, and Zeolyst, their 50%-owned JV with Shell. We paid $12 per share for our initial investment, we were paid $5 per share in special dividends in deal proceeds upon the divestitures, and PQG paid down $1 billion of debt to reduce leverage down to a more appropriate 2x. And of course – the name change to Ecovyst. Those actions produced nearly a double in the stock. Fast forward to August 2022 and the private equity owner, CCMP, was a forced sellers of stock in a secondary as their 2014 PE fund neared its end of life. The secondary sent the stock down significantly. Ecovyst now consists of their higher quality assets and again trades for under 8x EBITDA, which does not properly reflect the value of these businesses.”
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Ecovyst Inc. (NYSE:ECVT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Ecovyst Inc. (NYSE:ECVT) at the end of the third quarter, which was 13 in the previous quarter. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.