Alluvial Capital Administration, LLC is a registered funding advisory agency, that was based in 2014 by a Chartered Monetary Analyst, David Waters. Just lately Alluvial Capital Administration has launched its Q1 2020 Investor Letter, a replica of which you’ll obtain right here. Within the letter, amongst different issues, the fund reported a return for its Alluvial Fund LP Internet of -17.7% for Q1 2020. In the meantime, the benchmark Russell 2000 TR and the S&P 500 TR misplaced 30.60% and 19.60%, respectively.
Within the mentioned letter, Alluvial Capital highlighted just a few shares and MMA Capital Holdings Inc. (NASDAQ: MMAC) is considered one of them. MMA Capital Holdings engages in investing in debt related to renewable power infrastructure and actual property. Yr-to-date, MMAC inventory misplaced 13.4% and on April 29th it had a closing value of $28.00. Its market cap is of $157.1 million. Here’s what Alluvial Capital mentioned:
“MMA Capital Holdings is considered one of Alluvial’s longest-held firms, and presently some of the irritating. Regardless of clever, aligned administration, continued wonderful working outcomes, and a simplified stability sheet, shares proceed to commerce at monumental reductions to guide worth, with or with out the corporate’s substantial tax property. Excluding these tax property, shares now commerce at low cost to guide worth of round 40%. Together with tax property, shares commerce at lower than half of guide worth. Reductions to guide worth are sometimes justified for corporations that aren’t anticipated to earn their value of capital via the complete financial cycle. However MMA Capital Holdings is effectively on its method to attaining a constant double-digit return on fairness (tax property excluded.) The one logical clarification for the shares’ doldrums is concern over the mixed results of recession and freefalling oil costs on the corporate’s photo voltaic improvement mortgage guide. There shall be an impact. Essentially the most pristine of mortgage books in any trade will really feel some stress this yr. However the transfer towards photo voltaic will proceed. The financial case for renewables shouldn’t be pushed by short-term fossil fuels costs. There is no such thing as a motive to imagine MMA Capital Holdings will expertise a worrying diploma of impairment of its mortgage guide leading to a meaningfully decreased guide worth. If this diploma of weak point in its buying and selling value persists, I anticipate MMA to renew its share repurchase program. The monetary logic is just too compelling not to take action. I contemplate MMA Capital Holdings one of many best-managed firms I do know, and I’ve little doubt its shares shall be a number of instances the present value by the tip of the last decade. Whereas shares have been flat over the past three years, guide worth per share (excluding tax property) has grown 85% over the identical interval. This dynamic can not maintain perpetually.”
Disclosure: None. This text is initially revealed at Insider Monkey.