Does Topgolf Callaway Brands Corp. (MODG) Have Significant Room for Growth?
Polen Capital, an investment management company, released its “Polen U.S. Small Company Growth Strategy” fourth-quarter 2023 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the fund delivered 10.46% gross and 10.22% net of fees compared to a 12.75% return for the Russell 2000 Growth Index. The firm views the performance in many respects as evidence of the stability of its investment approach in the face of frequent and significant market swings. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Polen U.S. Small Company Growth Strategy featured stocks such as Topgolf Callaway Brands Corp. (NYSE:MODG) in the fourth quarter 2023 investor letter. Headquartered in Carlsbad, California, Topgolf Callaway Brands Corp. (NYSE:MODG) manufactures and distributes golf equipment and accessories. On February 20, 2024, Topgolf Callaway Brands Corp. (NYSE:MODG) stock closed at $14.59 per share. One-month return of Topgolf Callaway Brands Corp. (NYSE:MODG) was 4.07%, and its shares lost 37.89% of their value over the last 52 weeks. Topgolf Callaway Brands Corp. (NYSE:MODG) has a market capitalization of $2.692 billion.
Polen U.S. Small Company Growth Strategy stated the following regarding Topgolf Callaway Brands Corp. (NYSE:MODG) in its fourth quarter 2023 investor letter:
"Topgolf Callaway Brands Corp. (NYSE:MODG) was created in 2021 with the merger of Callaway, a longstanding and slower-growing collection of high-quality golf brands, and Topgolf, an emerging sports and entertainment company. We spent over a year researching Topgolf Callaway as we sought to gain comfort with the level of earnings post-pandemic (golf popularity increased significantly and the Topgolf operating model. Importantly, we believe the Topgolf business model has significant room for growth both in units and in unit-level profitability. At the same time, the core Callaway brands provide ballast and cash flow to be reinvested to drive future growth. Beyond stores/units, Topgolf Callaway has invested in great brands and golf technology that we believe will create additional runways for growth. While the company is profitable, earnings have been under pressure over the past year. However, we believe they will reach an inflection point based on business mix and growth in Topgolf sometime in FY24, before growing at a consistent low-to-mid teens rate driven by store/unit expansion."
A close up of a golf course mower, showcasing the intricate precision of its components.
Topgolf Callaway Brands Corp. (NYSE:MODG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Topgolf Callaway Brands Corp. (NYSE:MODG) was held by 25 hedge fund portfolios, down from 27 in the previous quarter, according to our database.
We discussed Topgolf Callaway Brands Corp. (NYSE:MODG) in another article and shared Jim Cramer’s 2024 predictions and top stock picks. In addition, please check out our hedge fund investor letters Q4 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.
