We recently compiled a list of the 10 Best Small-Cap Stocks to Buy Now According to Minerva Advisors. In this article, we are going to take a look at where Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) stands against the other small-cap stocks.
Established in the fourth quarter of 2002, Minerva Advisors, based in Pennsylvania, is an activist hedge fund managed by David Cohen. The firm specializes in equity investments, concentrating on small-cap and micro-cap value companies listed in the United States. Minerva Advisors employs a variety of investment strategies, including long bias, market dislocation exploitation, event-driven approaches, long-short strategies, thrift conversions, merger arbitrage, and capital structure arbitrage. From time to time, David Cohen launches activist campaigns targeting small portfolio companies in which Minerva Advisors holds relatively large equity stakes. One such example is the newspaper publisher A. H. Belo which was trading at around $4 per share when the stock had $2.58 in net cash per share on its balance sheet as well as other assets with a combined value of more than $4, hence valuing the company’s publishing business at zero.
David P. Cohen holds dual roles as President and Chief Compliance Officer at Minerva Advisors LLC, where he manages investment portfolios and research activities. His expertise lies in investing in small-cap and micro-cap companies, both in the U.S. and internationally, focusing particularly on the industrial and financial sectors. Cohen is the sole managing member of Minerva.
Before his tenure at Minerva, Mr. Cohen founded and served as President of Athena Capital Management, Inc. from 1988 to 2011. Athena later merged with Minerva Advisors. His career began as a research analyst and portfolio manager at a Philadelphia-based investment partnership from 1984 to 1988. Beyond his professional roles, Cohen has extensive board experience. He has been a member of the board of directors at CampusWorks, Inc. since 2011 and previously served on the board of Penn-America Group, a publicly held insurance company, from 1993 to 1997. Cohen earned his undergraduate degree from Haverford College, grounding his career in a solid academic foundation.
Minerva Advisors manages nearly $300 million in discretionary assets, as reported in their Form ADV filed in March 2024. The fund serves 7 clients and recently disclosed holdings of $163 million in managed 13F securities for Q1 2024, with its top ten holdings making up 62.67% of the portfolio.
Our Methodology
The stocks discussed in this article are part of Minerva Advisors’ investment portfolio as of the first quarter of 2024. To provide readers with comprehensive insights into these companies, we’ve included analyst ratings and other pertinent details. Additionally, we highlight the number of hedge fund investors involved in each company. Why focus on the stocks that hedge funds invest in? Our research shows that mimicking the top picks of the best hedge funds can lead to market-beating returns. Our quarterly newsletter’s strategy, which selects 14 small-cap and large-cap stocks each quarter, has returned 275% since May 2014, outperforming its benchmark by 150 percentage points. (see more details here)
A view from an aerial drone showing the progress of an extensive coastal restoration project.
Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD)
Number of Hedge Fund Holders: 17
Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), based in Houston, Texas, serves government agencies at various levels. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) operates a range of equipment, including hydraulic and hopper dredges, used in projects like port expansions, coastal restorations, and marine structure constructions. The company is also involved in offshore wind and LNG projects. Minerva Advisors owned 1,312,143 shares of Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) at the end of Q1 2024, worth $11,468,130, which represented 7.02% of its total portfolio.
In FY2023, Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) earned 21 cents per share from over $589 million in revenue. Analysts expect profits to more than triple to 72 cents per share in FY2024 with sales reaching $746 million. For FY2025, they forecast earnings of 80 cents per share on a five percent increase in revenue.
Cove Street Small Cap Value Fund stated the following regarding Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) in its first quarter 2024 investor letter:
“We made some sales during during the quarter as well. At the beginning of 2023, we initiated a position in Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) in the midst of a significant decline in the company’s results. Facilitated by the U.S. government, the “bid market” of projects for which GLDD competes evaporated in the first half of 2022 due to some combination of an extra-long Continuing Resolution, overly complicated budget authorization and allocation processes, and frankly, work-from-home inefficiencies. When your dredgers aren’t at work because you didn’t get your bid, you send them to the shipyard for maintenance, causing a “double-whammy” of less revenue and higher costs. GLDD’s margins in 2022 got crushed, as did the stock price. The bid market returned in late 2023, and GLDD’s backlog rebounded from $452m around the time of investment to $1.04B in early 2024, leading to a commensurate rise in the stock.
Concurrent with the return of Great Lakes’ core business to normalized conditions, GLDD has begun construction of a “wind vessel” with the purposes of facilitating the building of offshore wind farms on the East Coast of the United States beginning in late 2025. Given the myriad of headwinds facing these projects, this wind ship will be delivered into a highly uncertain demand environment for its use. We happily exited with the gains from our underwritten “bid market reversion” and before “wind” plays out.”
Overall GLDD ranks 4th on our list of the best small-cap stocks to buy. You can visit 10 Best Small-Cap Stocks to Buy Now According to Minerva Advisors to see the other small-cap stocks that are on hedge funds’ radar. While we acknowledge the potential of GLDD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GLDD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.