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Roubaix Capital Projects ‘Outsized Earnings Growth’ for WESCO International (WCC)

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Jose Karlo Mari Tottoc
·4 min read
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Roubaix Capital LLC, an investment management firm, published its ‘Roubaix Fund Composite’ fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A net return of 26.63% was recorded by the fund for the Q4 of 2020, outperforming its HFRI Equity Hedge benchmark that delivered a 14.50% return but below its Russell 2000 index that had a 31.37% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Roubaix Capital, in their Q4 2020 Investor Letter, said that WESCO International, Inc. (NYSE: WCC) was one of the top contributors for their portfolio in the fourth quarter of 2020. WESCO International, Inc. is a maintenance, repair, and operations company that currently has a $4 billion market cap. For the past 3 months, WCC delivered a decent 36.52% return and settled at $80.44 per share at the closing of February 12th.

Here is what Roubaix Capital has to say about WESCO International, Inc. in their Q4 2020 investor letter:

"The next largest long contributor was WESCO International (WCC). This company caught our attention due to the highly unusual circumstances that transpired. WCC was in the process of merging with peer Anixter International when private equity investors attempted to buy WCC and then the combined company. The facts were clear that there was significant value. WCC prevailed and was able to finalize the merger and avoid being acquired. However, timing added a wrinkle to the story. The deal closed not long before the pandemic struck and caused meaningful concern about the availability of capital. After the merger, WCC had significant leverage and at that time there was also uncertainty about the stability of their end markets. As our views evolved and as the U.S. Fed stabilized capital markets, we saw opportunities in companies that had meaningful levels of self-help, and we thought the balance sheet risk was less than the market believed. To date, this has been accurate and even the end markets for WCC proved to be resilient during the pandemic. While sharp appreciation has led us to reduce the size of our position in WCC, we anticipate outsized earnings growth in the years ahead from cost savings and an economic recovery."

Dmitry Kalinovsky/Shutterstock.com

Last November, we published an article telling that WESCO International, Inc. (NYSE: WCC) was in 34 hedge fund portfolios, its all time high statistics. WCC delivered an impressive 66.37% return in the past 12 months.

Our calculations show that WESCO International, Inc. (NYSE: WCC) 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

https://youtu.be/OgBhPDmWMtI

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.