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Highlights From White Brook Capital’s 2020 Q1 Investor Letter

Alex Smith

White Brook Capital is a fund founded by Basil Alsikafi last year in August. The fund delivered negative returns of about 35.79% in the first quarter. Basil Alsikafi said in a letter to investors (download a copy here) that Itron Inc (NASDAQ:ITRI) stock struggled in the first quarter. The stock fell in the first quarter due to the coronavirus pandemic. The competitive position of the company is weakened by the virus. Here is what Alsikafi said:

"Itron sells services that allow utilities and municipalities to save money or charge for services. As a leader in the industry, they will continue to exist and their hard assets are already products with relatively thin gross margins for an oligopolistic industry structure. They also sell software services that allow a municipality to manage their infrastructure. The problem is that municipalities globally will be more indebted and more restrained in their spending on these ultimately money saving programs with less than 3 year paybacks. Ultimately, weaker players won’t be able to survive lower spending levels, further consolidating the industry, but it is a guessing game to know whether Itron’s improved market and technology position can outrun the temporarily smaller budgets over the medium term. At this point our belief is that it will but we will continue to monitor."

Basil Alsikafi is bullish on Itron Inc. but hedge funds have been dumping the stock since the end of September last year (see the chart here).

Basil Alsikafi’s comments on BOX

Basil Alsikafi said that the competitive position of Box Inc (NASDAQ:BOX) is strengthened by the coronavirus pandemic. BOX's service allows an agnostic workplace location which is important for almost every business in the future. Here is what Alsikafi said:

"Box’s competitive position and industry are strengthened by Covid-19. Their service aids a location agnostic work force that is necessary for the future for almost every company. While regulated industries have been amongst the last to adopt collaborative work from anywhere technologies, Covid-19 catalyzes its adoption. Additionally, advanced data loss prevention and security features ensure that human resource changes that might be necessary in the future won’t harm the sanctity of a business’s files. The price of the stock is beyond reasonable even while other SaaS companies are richer while their businesses are more stressed in an environment that favors spending on fundamental technology and not the “nice to have” infrastructure others purvey. While a slowdown in bookings is likely for the 1st calendar quarter, especially given that Box gave away the product to new customers for 90 days, we expect business trends and the stock to improve considerably from here."

Box Inc shares recovered most of their losses over the last month. Do you think BOX stock will continue to improve from here?

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