Upslope Capital Management, an investment management firm, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. Q3 was a near-ideal environment for Upslope’s investment style, so the fund returned +14.8% (net) in Q3 compared to +6.8% and +2.3% for the S&P Midcap 400 ETF (MDY) and HFRX Equity Hedge Index, respectively. YTD, the fund’s return was +18.1% (net) compared to +13.2% and +7.5% returns, respectively, for the indexes. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Upslope Capital Management highlighted stocks like CompoSecure, Inc. (NASDAQ:CMPO) in the third quarter 2024 investor letter. CompoSecure, Inc. (NASDAQ:CMPO) is a manufacturer of metal, composite, and proprietary financial transaction cards. The one-month return of CompoSecure, Inc. (NASDAQ:CMPO) was 10.64%, and its shares gained 150.92% of their value over the last 52 weeks. On October 18, 2024, CompoSecure, Inc. (NASDAQ:CMPO) stock closed at $15.08 per share with a market capitalization of $1.245 billion.
Upslope Capital Management stated the following regarding CompoSecure, Inc. (NASDAQ:CMPO) in its Q3 2024 investor letter:
“The Fund added several new longs – CME Group, CompoSecure, Inc. (NASDAQ:CMPO), and Mitsubishi Heavy Industries – most significantly during the early August swoon. Despite markets sitting near all-time highs, I still see pockets of value on the long side. Naturally, there appear to be ample opportunities for shorts.
CompoSecure is the leading producer of premium metal credit cards, with almost 85% market share7 in the U.S. and a growing international presence. The company dominates this growing, niche market, and does so via defensible, long-term contracts. Fundamentally, CMPO has performed well despite being a de-SPAC (that also navigated a COVID era demand surge). FCFE has historically been strong – growing HSD% and typically converting at ~100% of adjusted EPS.
In early August, the company announced a financially and strategically transformative transaction (now closed): David Cote, a legendary capital allocator (ex-Honeywell, Vertiv) would invest $372mm via his family office entity. Financially, the transaction cleans up the capital/share structure and immediately boosts free cash flow by eliminating the old dual class share structure and associated tax payments. Strategically, Cote will assume the role of Executive Chairman and seems poised to streamline operations and leverage CMPO for acquisitions in complementary verticals (a playbook Cote has deep experience deploying).”
A close up of a metal composite product, emphasizing its strength in design.
CompoSecure, Inc. (NASDAQ:CMPO) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held CompoSecure, Inc. (NASDAQ:CMPO) at the end of the second quarter which was 16 in the previous quarter. CompoSecure, Inc.’s (NASDAQ:CMPO) net sales increased by 10% to $108.6 million in the second quarter. While we acknowledge the potential of CompoSecure, Inc. (NASDAQ:CMPO) 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed CompoSecure, Inc. (NASDAQ:CMPO) and shared the list of stocks that Could 10X over the next 5 years. In addition, please check out our hedge fund investor letters Q3 2024 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.