New York City-based investment management firm Third Avenue Management has released its 2023 Q4 Investor Letter for its Small Cap Value Fund. You can download a copy of the same here. The fund returned 21.88% in 2023, while the Russell 2000 Value Index returned 14.65%. The fund returned 9.38% in the fourth quarter, while the index returned 15.26%. Both absolute and relative returns for the year were satisfactory. Over the past two years, stock prices have changed rapidly due to changes in the interest rate outlook. Additionally, you can check out the fund's top five holdings to learn about the best stocks for 2023.
Third Avenue Management Small Cap Value Fund featured stocks such as Collegium Pharmaceuticals, Inc. (NASDAQ:COLL) in its Q4 2023 Investor Letter. Collegium Pharmaceutical, Inc. (NASDAQ:COLL), headquartered in Stoughton, Massachusetts, is a specialty pharmaceutical company. On January 30, 2024, Collegium Pharmaceutical, Inc. (NASDAQ:COLL) stock closed at $33.45 per share. Collegium Pharmaceutical, Inc. (NASDAQ:COLL)'s 1-month return is -1.21%, and the company's stock has increased his 14.09% in value over the past 52 weeks. Collegium Pharmaceutical, Inc. (NASDAQ:COLL) has a market capitalization of $1.091 billion.
Third Avenue Management Small-Cap Value Fund said the following about Collegium Pharmaceutical, Inc. (NASDAQ:COLL) in its Q4 2023 Investor Letter:
“Collegium Pharmaceutical Inc.” (NASDAQ:COLL) was added to the portfolio this quarter. The outline of the paper is as follows.
COLL is an abuse-deterrent opioid company. Since entering the commercialization stage in 2019, the company has benefited from providing a competitive product to OxyContin. COLL's lead drug (Xtampza) does not have a black box warning from the FDA regarding pain management. This indicates a low potential for abuse in this important patient population. COLL is a company we've been keeping an eye on for years, having announced the acquisition of its No. 2 competitor, Biodelivery Sciences, in 2021. During that time, we have built confidence in the durability and continued growth of COLL's future cash flows. COLL's valuation remains depressed along with the broader healthcare sector. This is an attractive entry point now that COLL has secured multi-year payer contracts with significantly higher margins thanks to responsible pain management (as payers move away from OxyContin). These contract renewals should help build COLL's scale and profitability and provide a clear path to improving its balance sheet.
The fund began investing in COLL when it was trading at just 3.2 times free cash flow 3, or 5.25 times enterprise value to EBITDA 4. In addition to the low absolute valuation, this investment was purely income-focused and did not take the time to scrutinize one-time items (such as costs associated with settlement agreements or debt extinguishment) that understate the return. seems to have been misunderstood by investors who guessed. Strong operational track record. The company has now completed the majority of its multi-year payer contracts at significantly higher margins to COLL. To highlight this development and what is missing in the market, we believe that if COLL continues to operate as is and repays its debt, it could have a net cash position of $1 billion by 2027. I am estimating. ) could generate an additional $1 billion in free cash flow over the next three years if it remains off the market. Current market capitalization is approximately $1 billion…” (Click here to read the full story)
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Collegium Pharmaceutical, Inc. (NASDAQ:COLL) isn't on the list of 30 most popular stocks among hedge funds. Our database shows that 19 hedge fund portfolios owned Collegium Pharmaceuticals (NASDAQ:COLL) at the end of the third quarter, compared to 21 in the prior quarter.
We talked about Collegium Pharmaceutical, Inc. (NASDAQ:COLL) in another article and shared a list of cheap Nasdaq stocks to buy. Additionally, for investor letters from hedge funds and other leading investors, please visit our Hedge Fund Investor Letters Q4 2023 page.
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Disclosure: None. This article was originally published on Insider Monkey.
