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Old West Investment Management: “IDT is Creating Significantly More Value for Shareholders”

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·4 min read
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Old West Investment Management, an investment management firm, published its first quarter 2021 investor letter – a copy of which can be downloaded here. An average return of 25% was delivered by the fund for the Q1 of 2021, ahead of its S&P 500 benchmark that delivered a 6% return for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Old West Investment Management, in their Q1 2021 investor letter, mentioned IDT Corporation (NYSE: IDT), and shared their insights on the company. IDT Corporation is a Newark, New Jersey-based cloud communications provider that currently has a $615.7 million market capitalization. Since the beginning of the year, IDT delivered an impressive 93.65% return, massively extending its 12-month gains to 343.24%. As of April 28, 2021, the stock closed at $24.10 per share.

Here is what Old West Investment Management has to say about IDT Corporation in their Q1 2021 investor letter:

"As our clients and readers of past Old West Investor Letters know, we look to invest in companies led by management teams that are among the largest company shareholders and who have demonstrated the ability to allocate capital effectively and efficiently. At the top of that list is IDT Corporation (“IDT”) and its founder and Chairman, Howard Jonas. Howard Jonas founded IDT Corporation in 1990 and has been incredibly successful at creating value for its shareholders by using the cash flows from its core telecom business to fund a wide array of growth initiatives. In just the past decade, IDT has spun-off five public companies and sold a sixth after which it paid a special dividend to shareholders.

Had you invested in IDT in January 2010 and kept each of the spin-offs, an investment in IDT + SpinCo’s has generated greater than 50% annualized returns for shareholders vs. 12% for the S&P 500. As an example, one of IDT’s more recent spinoff successes is a company called Zedge Inc, which has been one of Old West’s largest contributors to performance. We received shares when the business was spun-off in 2016, and we have continued to build our position, most recently participating in a private offering of common stock $1.28 per share in February 2020. We had spent hundreds of hours learning the business, meeting with management, and trying to understand its various business verticals, which gave us the comfort and conviction needed to ultimately own 14% of the Company’s overall shares. After several years of what seemed to be little progress as the company built out its new offerings and invested for future growth, Zedge recently reported record revenue growth of 101% in its most recent quarter. Free Cash Flow has increased 5x from $0.4 million in Q2 2020 to $2.1 million in Q2 2021. As a result, Zedge’s stock price has appreciated to over $14.00 per share, or more than 10x above where we participated in the capital raise a little over a year ago on behalf of our clients. Despite this incredible success, we believe that Howard Jonas/IDT are in the early innings of creating significantly more value for shareholders."

Our calculations show that IDT Corporation (NYSE: IDT) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, IDT Corporation was in 9 hedge fund portfolios, compared to 7 funds in the third quarter. IDT delivered a decent 69.60% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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