Praetorian Capital, an investment management company, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund was down by 2.29% net of fees in the third quarter. The core portfolio positions mostly declined in the quarter, while the Event-Driven book produced a slightly positive return. In the first nine months, the net performance was mostly driven by the Event-Driven book, with a modest negative return from the core book. For more information on the fund’s top picks in 2024, please check its top five holdings.
Praetorian Capital highlighted stocks like A-Mark Precious Metals, Inc. (NASDAQ:AMRK), in the third quarter 2024 investor letter. A-Mark Precious Metals, Inc. (NASDAQ:AMRK) is a precious metals trading company. The one-month return of A-Mark Precious Metals, Inc. (NASDAQ:AMRK) was 1.12%, and its shares gained 50.16% of their value over the last 52 weeks. On October 18, 2024, A-Mark Precious Metals, Inc. (NASDAQ:AMRK) stock closed at $43.55 per share with a market capitalization of $998.112 million.
Praetorian Capital stated the following regarding A-Mark Precious Metals, Inc. (NASDAQ:AMRK) in its Q3 2024 investor letter:
“A-Mark Precious Metals, Inc. (NASDAQ:AMRK): As the world gets increasingly crazy, I believe that people will come to realize that ownership of precious metals, in physical form, as opposed to in a brokerage account, is part of being financially prudent. They will mostly likely buy those coins from a coin dealer, either in person, or online. A-Mark supplies both of those markets as one of the largest players in online coin brokerage through their JM Bullion, LPM, Silver Gold Bull, Goldline, etc. verticals, along with serving as one of the largest wholesalers to local coin shops. A-Mark also has stakes in two mints (Silver Towne and Sunshine).
A-Mark benefits from periods of chaos in two ways. They see transaction volumes increase, and they see the spreads that they can charge widen. During the three years from Fiscal 2021 to 2023, A-Mark earned approximately $7 a share per year on average, if you adjust for certain non-recurring items and remove non-cash intangible amortization. We acquired our shares for approximately four times this earnings level, which seems quite cheap for a business with such high returns on capital. That said, the business has seen reduced earnings over the past few quarters, as a result of declining transaction volumes and spreads. I believe that this decline in activity has created a unique opportunity to buy a high-quality business, with substantial insider ownership, at a bargain price. I naturally am enamored of the counter-cyclical nature of the business, which hopefully should help offset the risks to our portfolio in future periods of crisis.
I believe that this business can earn as much as $10 a share in such a period of crisis, and get a healthy multiple applied to it. For years, I have sought out a way to play an increase in the prices of precious metals, without the risks of owning a mine. I believe that A-Mark is the ideal proxy for this view and as other investors discover it, the valuation will re-rate.”
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A-Mark Precious Metals, Inc. (NASDAQ:AMRK) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held A-Mark Precious Metals, Inc. (NASDAQ:AMRK) at the end of the second quarter which was 19 in the previous quarter. In the fiscal year 2024, A-Mark Precious Metals, Inc. (NASDAQ:AMRK) reported $66.2 million of net income and diluted EPS of $2.75 per share, despite facing headwinds. While we acknowledge the potential of A-Mark Precious Metals, Inc. (NASDAQ:AMRK) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed A-Mark Precious Metals, Inc. (NASDAQ:AMRK) and shared Praetorian Capital’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.