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Bernzott Capital on ORBCOMM (ORBC): “Our Investment was Sold but with a Solid Profit”

Bernzott Capital Advisors, an investment management firm, published its “US Small Cap Value Fund” second-quarter 2021 investor letter – a copy of which can be downloaded here. The fund recorded a quarterly portfolio return of +1.5% for the second quarter of 2021, compared to its benchmarks, the R200V Index that was up by 4.29%, and the R2500V Index which gained 5.0% for the same period. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.

In the Q2 2021 investor letter of Bernzott Capital, the fund mentioned ORBCOMM Inc. (NASDAQ: ORBC) and discussed its stance on the firm. ORBCOMM Inc. is a Rochelle Park, New Jersey-based mobile network provider company with a $910.9 million market capitalization. ORBC delivered a 54.04% return since the beginning of the year, extending its 12-month returns to 180.84%. The stock closed at $11.43 per share on August 19, 2021.

Here is what Bernzott Capital has to say about ORBCOMM Inc. in its Q2 2021 investor letter:

"ORBCOMM (ORBC): The company agreed in April to be acquired by a private equity investment firm for $11.50, a significant premium to prior trading levels. As a result, our investment was sold after a necessarily short holding period (initiated in March 2021) but with a solid profit."

provider, network, datacenter, parallel, net, hardware, business, server, new, internet, tech, hub, broadband, cable, data, cords, port, socket, digital, adapter, rack,
provider, network, datacenter, parallel, net, hardware, business, server, new, internet, tech, hub, broadband, cable, data, cords, port, socket, digital, adapter, rack,

EvgeniiAnd/Shutterstock.com

Based on our calculations, ORBCOMM Inc. (NASDAQ: ORBC) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. ORBC was in 26 hedge fund portfolios at the end of the first half of 2021, compared to 19 funds in the previous quarter. ORBCOMM Inc. (NASDAQ: ORBC) delivered a 2.05% return in the past 3 months.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.

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