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Alta Fox Capital: “XPEL is an Excellent Business”

·3 min read

Alta Fox Capital, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. In Q2 2022, the Alta Fox Opportunities Fund (“the Fund”) produced a gross return of -8.46% and a net return of -8.66%. The Fund’s average net exposure during the quarter was 73%. Since its inception in April 2018, the Fund has produced a gross return of 505.72% and a net return of 330.36% compared to the S&P 500’s return of 54.52% and the Russell 2000’s return of 17.91%. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Alta Fox Opportunities Fund mentioned XPEL, Inc. (NASDAQ:XPEL) and explained its insights for the company. Founded in 1997, XPEL, Inc. (NASDAQ:XPEL) is a San Antonio, Texas-based protective films and coatings provider with a $1.6 billion market capitalization. XPEL, Inc. (NASDAQ:XPEL) delivered a -10.24% return since the beginning of the year, while its 12-month returns are down by -33.81%. The stock closed at $61.29 per share on July 29, 2022.

Here is what Alta Fox Opportunities Fund has to say about XPEL, Inc. (NASDAQ:XPEL) in its Q2 2022 investor letter:

"XPEL is a business that Alta Fox has followed and owned for years. In mid-2021, we reduced our positions in both on valuation concerns but have since added to our positions significantly in 2022. Compared to mid-2021, we believe each idiosyncratic growth thesis is largely unchanged (if not improved), yet our view of valuation has gone from extremely expensive to extremely cheap. Remaining disciplined on valuation is a key tenant of our investment strategy and has allowed us to add with confidence to both businesses in 2022 despite macro noise.

XPEL, Inc. (NASDAQ:XPEL): Our conviction in the improving availability of semiconductors for auto OEMs has only increased since Q1, as demand for semis from other industries has declined considerably on the back of weakening consumer demand for electronics and prolonged recession fears. Unlike previous recessions, we believe that this time around auto vehicles sales will increase meaningfully over the prior period due to all-time-low dealer inventories and backlogged consumer demand for new cars – a significant tailwind to accelerate XPEL’s sales and earnings growth in the 2H 2022 and into 2023. We believe XPEL is an excellent business trading at close to trough multiples on consensus numbers that we believe are too conservative."

Pixabay/Public Domain

Our calculations show that XPEL, Inc. (NASDAQ:XPEL) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. XPEL, Inc. (NASDAQ:XPEL) was in 13 hedge fund portfolios at the end of the second quarter of 2022, compared to 20 funds in the previous quarter. XPEL, Inc. (NASDAQ:XPEL) delivered a 41.65% return in the past 3 months.

In September 2021, we also shared another hedge fund’s views on XPEL, Inc. (NASDAQ:XPEL) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

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