Our material long positions (>3% of the portfolio) at the end of June were as follows (in order of size): Stratasys (SSYS), Trex Co. (TREX), NOW Inc. (DNOW), Zebra Technologies Corp. (ZBRA), Colfax Corp. (CFX), IPG Photonics (IPGP), Materion Corp. (MTRN), Astronics Corp. (ATRO), Generac Holdings Inc., (GNRC), Balchem Corp. (BCPC), Proto Labs (PRLB), Kirby Corp. (KEX), and Primoris Services Corp. (PRIM).
The only name no longer on the list is Core Laboratories (CLB), which we have trimmed below the materiality threshold as the stock has climbed with crude prices.
Primoris Services Corp. (PRIM) returned to the list in June as we rebuilt the position on a share price decline. As to what has caused the decline, we presume people are worried that excessive rain in Texas (PRIM’s largest market) will lead to a 2Q:16 earnings miss; given that we live in Austin (and we’ve confirmed with PRIM’s Dallas-based management), most of the rain has been in Houston, where PRIM has less of a presence… not to mention, one rain-filled quarter is hardly a long-term business concern.
The only truly new position on the list is Zebra Technologies Corp. (ZBRA). Like so many names in our portfolio, this is a company with which have many years of experience spanning both the buy- and sell-sides, and we know management well. Zebra, particularly after its acquisition of Motorola Solutions, is one of the largest provider of asset tracking solutions (bar code printers, scanners, RFID tags, etc.) in the world. As mentioned earlier in this letter, ZBRA shares plummeted in recent months after a couple of earnings misses. The earnings misses were due to a combination of slower-than-expected end-market conditions and temporarily aggressive pricing (to lock in very long-term contracts with higher margins on the back end). As we also mentioned earlier, we think there is minimal downside left for the stock and the earnings outlook. Longer-term, we think ZBRA will continue to benefit from the secular trend toward supply chain transparency and speed, and we expect the company’s high-quality management team to continuously find new ways to squeeze higher margins out of the business.
The above post has been excerpted from a letter of Liberty Park Capital Management.
This monthly letter, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to whom it has been delivered by Liberty Park Fund, LP and it is not to be reproduced or redistributed to any other person without the prior written consent of the Fund. This information has been compiled by Liberty Park Capital Management, LLC and while it has been obtained from sources deemed to be reliable, no guarantee is made with respect to its accuracy. The Fund does not represent that the information herein is accurate, true or complete, makes no warranty, express or implied, regarding the information herein and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, truth, completeness or use. This monthly letter is subject to a more complete description and does not contain all of the information necessary to make an investment decision, including, but not limited to, the risks, fees and investment strategies of the Fund. Any offering is made only pursuant to the relevant private offering memorandum, together with the current financial statements of the Fund, if available, and a relevant subscription application, all of which must be read in their entirety. No offer to purchase interests will be made or accepted prior to receipt by an offeree of these documents and the completion of all appropriate documentation. Liberty Park Fund, LP’s 2011 returns are audited; however, all other figures are estimated and unaudited. Net results reflect the net realized and unrealized returns to a limited partner after deduction of all operational expenses (including brokerage commissions), management fees and performance allocations. Performance data assume reinvestment of all distributions. Actual returns will vary from one limited partner to the next in accordance with the terms of the fund’s limited partnership agreement. Past performance is not indicative of future results and investors risk loss of their entire investment. Performance results are shown for the period from February 2011 through May 2016. References in this presentation are made to the Russell 2000 Index for comparative purposes only. Liberty Park Fund, LP may be less diversified than the Russell 2000 Index. The Russell 2000 Index may reflect positions that are not within Liberty Park Fund, LP’s investment strategy.