Here’s Why You Should Consider Investing in Whole Earth Brands (FREE)

·3 min read

Maran Capital Management, an investment management firm, published its second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly median account return of +24.9% net of fees was recorded by the fund for the second quarter of 2021, bringing year-to-date returns to +53.1%, net. Over the past five years, the partnership has compounded at the annualized rate of +26.2%, net, based on the fund’s standard fee structure. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.

In the Q2 2021 investor letter of Maran Capital Management, the fund mentioned Whole Earth Brands, Inc. (NASDAQ: FREE), and discussed its stance on the firm. Whole Earth Brands, Inc. is a Chicago, Illinois-based global food company, that currently has a $504.1 million market capitalization. FREE delivered a 20.28% return since the beginning of the year, extending its 12-month returns to 88.90%. The stock closed at $13.11 per share on July 29, 2021.

Here is what Maran Capital Management has to say about Whole Earth Brands, Inc. in its Q2 2021 investor letter:

"We continue to hold core positions in previously disclosed companies (including) Whole Earth Brands (FREE). Each are asset-light, branded, buy-and-build growth companies operating in various areas of the consumer sector. Branded packaged food company Whole Earth Brands, at ~8x 2022 EBITDA, has better organic growth, margins, and returns on capital than many consumer food companies trading at almost twice its multiple. As investors look forward to cleaner 2022 results (pro forma for two acquisitions), I believe there is meaningful room for the company to re-rate."

Condiments, Food
Condiments, Food

Photo by Andra Ion on Unsplash

Based on our calculations, Whole Earth Brands, Inc. (NASDAQ: FREE) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. FREE was in 25 hedge fund portfolios at the end of the first quarter of 2021, compared to 24 funds in the fourth quarter of 2020. Whole Earth Brands, Inc. (NASDAQ: FREE) delivered a -2.89% return in the past 3 months.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage.

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

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting