O’keefe Stevens Advisory, an investment advisory firm, released its second-quarter 2023 investor letter. A copy of the same can be downloaded here. The first half of 2023 was dominated by the tech sector. The proliferation of artificial Intelligence led to staggering moves for large-cap companies. Year-to-date, the S&P was ~16% up. At the end of the second quarter, the top 5 holdings of the portfolio represented ~40% of assets. In addition, please check the fund’s top five holdings to know its best picks in 2023.
O’keefe Stevens Advisory highlighted stocks like Bowlero Corp. (NYSE:BOWL) in the second quarter 2023 investor letter. Headquartered in Mechanicsville, Virginia, Bowlero Corp. (NYSE:BOWL) operates bowling centers. On July 20, 2023, Bowlero Corp. (NYSE:BOWL) stock closed at $11.32 per share. One-month return of Bowlero Corp. (NYSE:BOWL) was -2.58%, and its shares gained 4.24% of their value over the last 52 weeks. Bowlero Corp. (NYSE:BOWL) has a market capitalization of $1.795 billion.
O’keefe Stevens Advisory made the following comment about Bowlero Corp. (NYSE:BOWL) in its second quarter 2023 investor letter:
“Bowlero Corp. (NYSE:BOWL): One aspect of investing often overlooked relates to analyzing businesses where you have a superior understanding of the product or service. One industry this pertains to us is the Bowling Industry. From bowling at an early age, to collegiate bowling, to working at an alley, I can’t think of another business where I better understand the trends and economics than the bowling industry.
Bowlero came public via a SPAC in 2021. BOWL is among the few SPACs trading above the initial cash shell value. The bowling alley roll-up story is an easy sell. Acquiring dozens of poorly operated alleys from mom and pops every year, improving operations, and using the improved cashflows to acquire other centers. The high fixed-cost nature of the business results in high incremental margins (almost 100%) for every additional game bowled. This operating leverage, however, cuts both ways. With unemployment rising, economic stimulus cutoff, student loan payments returning, and higher mortgage rates. The disposable income individuals once enjoyed is likely declining. In addition, bowling is structurally a declining sport, even though management says otherwise. From accounting games, including PIK interest on preferred stock, operating/financing lease adjustments that overstate margins, and insider sales, all combined with a demanding valuation, make this an attractive short.”
Bowlero Corp. (NYSE:BOWL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Bowlero Corp. (NYSE:BOWL) at the end of first quarter which was 20 in the previous quarter.
We discussed Bowlero Corp. (NYSE:BOWL) in another article and shared George Soros’ top stock picks. In addition, please check out our hedge fund investor letters Q2 2023 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.