Does Darling Ingredients (DAR) Have a Strong Track Record of Long-Term Value Creation?
SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the strategy returned 4.22% on a gross basis compared to a 2.74% return for the Russell 2000 Index and -0.66% for the Russell 2000 Value Index. Since its inception, the strategy has continued to outperform both indexes on an annualized gross and net basis. In addition, please check the top 5 holdings of the strategy to know its best pick in 2023.
SouthernSun Small Cap Strategy highlighted stocks like Darling Ingredients Inc. (NYSE:DAR) in the first quarter 2023 investor letter. Headquartered in Irving, Texas, Darling Ingredients Inc. (NYSE:DAR) produces natural ingredients from edible and inedible bio-nutrients. On May 3, 2023, Darling Ingredients Inc. (NYSE:DAR) stock closed at $56.60 per share. One-month return of Darling Ingredients Inc. (NYSE:DAR) was -0.21%, and its shares lost 24.94% of their value over the last 52 weeks. Darling Ingredients Inc. (NYSE:DAR) has a market capitalization of $9.051 billion.
SouthernSun Small Cap Strategy made the following comment about Darling Ingredients Inc. (NYSE:DAR) in its Q1 2023 investor letter:
“Darling Ingredients Inc. (NYSE:DAR), was a top detractor for the quarter. A global leader in renewable energy and sustainable food and feed ingredients, DAR delivered strong year-end results with a record $1.541 billion in EBITDA despite margin pressure from the company’s recent acquisition of Valley Proteins and fires at two rendering facilities. The company ambitiously acquired three companies in 2022, Op de Beeck in Belgium, Valley Proteins in the U.S. and FASA Group in Brazil. Darling just completed its announced acquisition of Gelnex on 3/31/2023, and are on track to complete the announced acquisition of Miropasz by the third quarter of this year. Darling has furthermore deployed capital at its Diamond Green Diesel facility in Port Arthur, Texas, increasing renewable diesel production to 1.2 billion gallons per year. These investments have unsurprisingly increased the company’s debt ratio to slightly over 3x, but have also further strengthened Darling’s vertical supply chain integration and market presence to an impressive degree. Finally, the company announced in late January that DGD will invest $315 million in a Sustainable Aviation Fuel (SAF) project at the Port Arthur plant. Upon completion in 2025, the plant will have the capability to upgrade 50% of its current 470 million gallon annual production capacity to SAF. In a global market seeking to decarbonize, Darling addresses this critical need while processing 1 out of every 7 animals into food ingredients, feed ingredients and renewable energy. We continue to be impressed with management’s ability as well as their track record to capitalize on opportunities and enhance optionality to ultimately drive value over the long term.”
Darling Ingredients Inc. (NYSE:DAR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held Darling Ingredients Inc. (NYSE:DAR) at the end of the fourth quarter which was 35 in the previous quarter.
We discussed Darling Ingredients Inc. (NYSE:DAR) in another article and shared Artisan Global Equity Fund's views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q1 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.
