Investment management firm Rowan Street Capital has published its investor letter for the first half of the year 2022. The fund is 57% lower after the first half of the year. Most of the fund’s -41% drop occurred during the second quarter. However, as of July 20’s close, the fund had gained 19%.
Rowan Street Capital’s biggest performance detractors, including Meta Platforms, Inc (NASDAQ:META), were discussed in the letter. Located in Menlo Park, California, technological behemoth Meta Platforms, Inc.(NASDAQ:META) trades under the ticker symbol “NASDAQ:META.” The price of a single share of Meta Platforms, Inc. stock (NASDAQ:META) was $178.34 as of the market close on August 10, 2022. Meta Platforms, Inc. (NASDAQ:META) gained 12.84% over a single month, but the stock price dropped 50.82% for a year. The current market valuation for Meta Platforms, Inc. (NASDAQ:META) is $485.452B.
What Rowan Street Capital had to say about Meta Platforms, Inc. (NASDAQ:META) is as follows:
Competition from TikTok, a recent Apple privacy change on iOS (lower effectiveness of targeted ads), and substantial expenditures in the Metaverse are all legitimate concerns for the future of the Meta Platforms, Inc. (NASDAQ:META) business (Reality Labs Division).
Even while Meta’s (NASDAQ:META) revenue growth slowed to 7% in the most recent quarter, the company increased investment in unprofitable segments like Reality Labs, which creates its VR and AR gadgets, and on new short videos for Facebook and Instagram, which might eventually widen its moat against TikTok. The bears were certain that Meta’s high-growth days were over due to the company’s declining revenues and increasing expenses.
Meta (NASDAQ:META) is trading like a cyclical energy business, selling at just 14x this year’s earnings and 12x 2023 predicted earnings because of the rising macro concerns and a massive sell-off in growth companies. Their free cash flow per share in 2021 was $13.68. This results in a free cash flow yield of approximately 10% using historical data (obviously, their cash flow can decline). Stocks are trading at an all-time low of 3.6x price-to-sales ratio (see below).
When looking at the 30 stocks most loved by hedge funds, Meta Platforms, Inc. (NASDAQ:META) comes in at #4. According to our database, the number of hedge funds holding Meta Platforms, Inc. (NASDAQ:META) shares decreased to 200 at the end of the first quarter from 224 at the end of the fourth quarter.
In another article, we revealed the list of cheap high-free-cash-flow stocks to purchase in a downturn, including Meta Platforms, Inc. (NASDAQ:META). For more investor letters from hedge funds and other notable investors, see our Q2 2022 page dedicated to hedge fund investor letters.
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Author Shariq Khan 
