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Should You Invest in Kingsway Financial Services (KFS)?

Alphyn Capital Management, an investment management firm, released its third-quarter 2023 investor letter. The same can be downloaded here. The Master Account of the fund returned -1.1% net in the third quarter compared to -3.3% for the S&P500 Index. As of September 30, 2023, the top ten holdings accounted for approximately 71% of the portfolio, and approximately 8.6% of the portfolio was held in cash. In addition, please check the fund’s top five holdings to know its best picks in 2023.

Alphyn Capital Management highlighted stocks like Kingsway Financial Services Inc. (NYSE:KFS) in the third quarter 2023 investor letter. Headquartered in Chicago, Illinois, Kingsway Financial Services Inc. (NYSE:KFS) engages in extended warranty and business services. On November 24, 2023, Kingsway Financial Services Inc. (NYSE:KFS) stock closed at $7.27 per share. One-month return of Kingsway Financial Services Inc. (NYSE:KFS) was -5.09%, and its shares gained 0.41% of their value over the last 52 weeks. Kingsway Financial Services Inc. (NYSE:KFS) has a market capitalization of $205.679 billion.

Alphyn Capital Management made the following comment about Kingsway Financial Services Inc. (NYSE:KFS) in its Q3 2023 investor letter:

"I added a new position to our portfolio: Kingsway Financial Services Inc. (NYSE:KFS). KFS is a holding company with two primary segments: a warranty business and a search fund accelerator business, which I’ll discuss in more detail below.

KFS has a checkered history, as evidenced by its volatile stock price. The company’s roots lie in the warranty business, which provides extended warranty services covering repair or replacement costs for vehicle service agreements, HVAC systems, standby generators, commercial LED lighting, and refrigerators. This business experienced a rapid growth of 60% per year, accompanied by a soaring stock price. However, lax underwriting standards were exposed during 2006-2008, leading to catastrophic losses and a staggering $1 billion in net operating losses (NOLs). Activist investors intervened and brought in new management. It took two attempts to stabilize the company. The first CEO attempted to build a merchant banking-type business, but instead of creating a mini-Berkshire Hathaway-style conglomerate, he ended up with an opaque, conflict-ridden business with poorly performing investments..." (Click here to read the full text)

A fleet of motorcycles and vehicles lined up in an assembly line with workers in the background.

Kingsway Financial Services Inc. (NYSE:KFS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held Kingsway Financial Services Inc. (NYSE:KFS) at the end of third quarter which was 3 in the previous quarter. In addition, please check out our hedge fund investor letters Q3 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.

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