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Maran Capital on American Outdoor (AOUT): ‘Free Cashflow is Very High’

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Jose Karlo Mari Tottoc
·3 min read
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Maran Capital Management LLC, a value-driven, concentrated, long-term investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A return of 14.8% was recorded by the fund for the Q4 of 2020, outperforming its S&P 500 benchmark that delivered a 12.15% return, but below its Russell 2000 index that returned 31.4%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Maran Capital Management, in their Q4 2020 Investor Letter said that they continue to hold their position in American Outdoor Brands, Inc. (NASDAQ: AOUT) and expects a great outcome from the company. American Outdoor Brands, Inc. is a premier provider of outdoor products and accessories, that has a $278.8 million market cap. For the past 3 months, AOUT delivered a decent 29.99% return and settled at $19.56 per share at the closing of February 2nd.

Here is what Maran Capital Management has to say about American Outdoor Brands, Inc. in their investor letter:

"In my last letter, I hinted at a new position: a cash-rich (although one had to scrutinize the footnotes to comprehend the balance sheet), growing consumer products company engaged in a buy and build strategy with insider buying that, as I wrote last quarter, “I believe has guided conservatively out of the gate.” The company is American Outdoor Brands (AOUT). Little did I know just how conservatively the company had indeed guided. Upon reporting its second fiscal quarter last month, AOUT raised its F21 guidance by 75% (!), from $20mm to $35mm of EBITDA. At the recent price of $19/sh, its enterprise value is $250mm. This means the business is trading at ~7x EBITDA. AOUT is asset-light and requires little capex, pays no interest expense, and has some tax shields in place, so its free cash flow conversion is very high."

Przemek Klos/Shutterstock.com

Last December 2020, we published an article telling that American Outdoor Brands, Inc. (NASDAQ: AOUT) was in 10 hedge fund portfolios, its all time high statistics. AOUT delivered a decent 17.09% return in the past 12 months.

Our calculations show that American Outdoor Brands, Inc. (NASDAQ: AOUT) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website.

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