Potbelly (PBPB) Was the Big Winner of Artko Capital in 2023
Artko Capital, an investment management company, recently released its fourth quarter 2023 investor letter. A copy of the same can be downloaded here. In the fourth quarter, an average partnership interest in the fund increased by 6.9% net of fees. However, investments in comparable indexes like Russell 2000, Russell Microcap, and the S&P 500 were up 14.0%, 16.1%, and 11.7% in the fourth quarter. For the full year, the fund was up 1.6% net of fees while comparable market indexes were up 16.9%, 9.3%, and 26.3% respectively. For more information on the fund’s top picks in 2023, please check its top five holdings.
Artko Capital featured stocks like Potbelly Corporation (NASDAQ:PBPB) in the fourth quarter 2023 investor letter. Based in Chicago, Illinois, Potbelly Corporation (NASDAQ:PBPB) owns and operates Potbelly sandwich restaurants. On March 4, 2024, Potbelly Corporation (NASDAQ:PBPB) stock closed at $14.06 per share. One-month return of Potbelly Corporation (NASDAQ:PBPB) was 13.48%, and its shares gained 66.00% of their value over the last 52 weeks. Potbelly Corporation (NASDAQ:PBPB) has a market capitalization of $412.785 million.
Artko Capital stated the following regarding Potbelly Corporation (NASDAQ:PBPB) in its fourth quarter 2023 investor letter:
"Potbelly Corporation (NASDAQ:PBPB)- 17.0% of Portfolio; $3.70 cost basis/$14.00 current price: After remaining flat in 2022, Potbelly was our big winner in 2023, up almost 100%, and another 30% so far this year. As a reminder, our investment in PBPB was originally a post-Covid recovery special situation with a substantial opportunity to change its business model from managing 400 specialty sandwich shop locations to managing 2000+ franchises as the company hired former Wendy's COO, Robert Wright, to execute on the strategy.
Our thesis continues to play out and then some. For 2023, the company's same-store sales are expected to come in at 12.0%, while below last year's 18.0%, strongly above average in the Quick Service Restaurant ('QSR') industry in 2023. Additionally, shop-level margins are expected to be 14.0%, almost a full 4.0% improvement from 2022. While the average unit volumes (AUVs) are in the industry's upper echelons at $1.3mm/year, we believe shop-level margins have a bit to go, to higher teens, from here. The overall 2023 revenues should come in above $490mm or 9.0% higher than year-end 2022 while EBITDA should be close to $30mm, though still only 6.0% margins, with a lot more room for expansion, especially as franchised locations continue to be a bigger part of the mix…” (Click here to read the full text)
A chef in a busy kitchen, adding the finishing touches to a signature sandwich.
Potbelly Corporation (NASDAQ:PBPB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Potbelly Corporation (NASDAQ:PBPB) was held by 10 hedge fund portfolios, down from 12 in the previous quarter, according to our database.
We discussed Potbelly Corporation (NASDAQ:PBPB) in another article and shared Immersion Investment Partners' views on the company. 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.
