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Rhizome Partners Bearish on Calumet, Bullish on Griffin

Alex Smith

Insider Monkey has recently published a copy of Rhizome Partners Q1 2020 investor letter. A copy of the letter can be downloaded here. Bill Chen is Rhizome Partners founder and managing partner. The fund was founded in 2013. In Q1 2020, Class B investors of Rhizome Partners witnessed a 14.0% net loss compared to a 19.6% net loss witnessed by the S&P 500. In the said letter, Bill Chen highlighted a few stocks and Griffin Industrial Realty Inc (NASDAQ:GRIF) is one of them. Griffin is engaged in real estate business. Here is what Bill Chen said:

"Griffin recently announced very positive news with Gordon Dugan joining the company as the new Chairman. The stock traded up 18% upon the announcement with heavy volume. Gordon Dugan is the former CEO of Gramercy Property Trust and sold his warehouse company to Blackstone in a $7.6 billion deal in 2018 generating a roughly 6x return for his shareholders. Investors have been looking for a way to invest with Gordon Dugan again. Warehouses are also emerging as a “safer” real estate asset due to the increased demand for e‐commerce. We even own a cashflow positive net‐net trading below its liquidation value and paying out a roughly 5% annual dividend from its free cashflow."

Hedge fund interest in Griffin shares was flat at the end of September 2019 (see the chart here).

Rhizome Partners comments on CLMT

In the said letter, Rhizome Partners also highlighted Calumet Specialty Products Partners L.P. (NASDAQ:CLMT) stock. Calumet manufactures naphthenic and paraffinic oils as well as aliphatic solvents and paraffin waxes. Here is what Bill Chen said:

"We recently exited Calumet as the combination of the CEO resignation, deteriorating markets for refinery M&A, and dislocation in the credit market made it extremely difficult for us to determine the potential outcomes. This was a painful mistake as the company is a few months away from selling their Montana refinery to significantly deleverage their balance sheet. We will careful study our mistakes and be determined to not repeat them. We will share with you an honest assessment of our mistake later on this year after much deliberation."

Do you think it was the appropriate time to sell CLMT stock?

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