Kerrisdale Gains on Herbalife Long, Opens New Stake in Omaha Based Co.VW Staff
Kerrisdale Partners LP achieved a quarterly return, net to investors, of 0.8% for the quarter ended June 30, 2013. The S&P 500 (.INX) index returned 2.9% during that time.
Year-to-date, the hedge fund has achieved a return of 9.8%, compared with 13.8% for the S&P 500 index. Since inception, the fund has achieved a return, net to investors, of 753.6%. The S&P 500 index has returned 90.2% during that time.
Kerrisdale Q1 letter 2013 here – Kerrisdale Returns 10%: Gains on Omnicom, Herbalife, AMERCO
Kerrisdales’ top five positive contributors were Herbalife Ltd. (NYSE:LTD), CME Group Inc (NASDAQ:CME), E TRADE Financial Corporation (NASDAQ:ETFC), Morgans Hotel Group Co. (NASDAQ:MHGC) and Omnicom Group Inc. (NYSE:OMC). The top five negative contributors were Short A, Strayer Education Inc (NASDAQ:STRA), Short B, Rio Alto Mining Ltd (NASDAQ:RIOM) and Short C.
The hedge fund opened a new long position in , below is a brief excerpt followed by the full letter in scribd:
Kerrisdale on Lindsay Corporation
A recent addition to our long portfolio is Lindsay Corporation (NASDAQ:LNN), an irrigation business headquartered in Omaha, Nebraska. Lindsay is one of the world’s leading providers of irrigation equipment, which are essentially large, high-end sprinkler systems that farmers use to irrigate their farms. Lindsay owns a world-renowned brand name (Zimmatic) that allows for premium pricing, and benefits from an under-penetrated international market. With no pure-play public peers, valuation metrics from the sell-side appear somewhat arbitrary, failing to credit Lindsay with a long-term track record of value creation. At its current share price, Lindsay offers a more than 10% pre-tax return on a completely under-levered balance sheet. The opportunity exists because irrigation demand is influenced by corn prices, and concern about declining corn prices has depressed the company’s valuation multiple. We think that Lindsay’s superior economics and promising international secular growth trajectory will ultimately transcend the current corn cycle, and we are happy to buy one of the world’s leading irrigation providers for less than $1bn at a 16x P/E multiple.