HVS 3Q22: Interviews With Arquitos Capital, Maran Partners Fund And Choice Equities Fund

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Hidden Value Stocks issue for the third quarter ended September 30, 2022. This part covers the updates from the previous issue of Hidden Value Stocks. It features interviews with Arquitos Capital, Maran Partners Fund and Choice Equities Fund.

See Part 2 here.


Welcome to the September 2022 (Q3) issue of Hidden Value Stocks.

In the first half of this issue, we have our usual updates from funds previously profiled in Hidden Value Stocks.

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Q2 2022 hedge fund letters, conferences and more


In the second half, there's an interview with Mesut Ellialtioglu, Turkey investment officer of the Talas Turkey Value Fund.

In the interview, the manager discusses where he's finding value in Turkey and why investors should not overlook this exciting market which is full of opportunities.

We hope you enjoy this issue of Hidden Value Stocks, and if you have any questions or comments, please feel free to contact us at [email protected].


Rupert Hargreaves & Jacob Wolinsky

Updates From The Previous Issue

Arquitos Capital

Steven Kiel’s Arquitos has been profiled a couple of times in Hidden Value Stocks. The firm focuses on finding uncovered small-cap ideas that the rest of the market appears to be overlooking.

Arquitos returned -26.3% net of fees in the second quarter of 2022, bringing the year-to-date return to -35.8%.

One of the fund's most significant holdings is ENDI Corp., which has decided to acquire CrossingBridge. In its Q2 letter, the fund explained why it believes this is a great transaction:

"The company decided to acquire CrossingBridge for two primary reasons: we believe that David Sherman is the right person to lead the company and generate significant shareholder value going forward; and we believe that more than doubling the size of the company through this acquisition will allow it to better manage the expenses associated with being an SEC-filing, publicly traded company.

I want to thank everyone who came along for the ride. We built a strong foundation over the last few years, and I believe that the future will be more exciting and profitable than the past. I have no plans to sell shares.


ENDI’s latest filing was through June 30 and did not include any CrossingBridge financials. However, the current stock price is below the company’s June 30 cash position, so there is now a substantial margin of safety"

Maran Partners Fund

In the second quarter of 2022, Maran Partners Fund returned -15.7%, net of all fees and expenses, bringing its year-to-date performance to -25.3%. Over the past five years, the partnership has compounded at a rate of approximately 14% net of fees.

Maran owns a position in CTT Correios de Portugal SA (ELI:CTT), Iberian mail/parcel carrier, bank and real estate conglomerate, which it believes is deeply undervalued on a sum-of-the-parts basis.

The company is progressing with plans to unlock value from its various businesses, suggesting there's an upcoming catalyst to unlock value on the horizon:

"Correios held its first capital markets day in several years last month in Lisbon. The three most important takeaways: the company reiterated its intention to monetize its bank, its intention to monetize its real estate, and its 2022 guidance.

Together, I think that the bank and the real estate more than cover the entire enterprise value of the company at its current stock price (around €400mm). This means investors are getting the rest of the company, with its ~€50mm+ of EBIT (after adjusting out the bank and real estate), for free. Valued at 10x EBIT, the core business might be worth €3-4 per share, and I believe this value will grow over time.

So, we have a stock trading at just over €3 with €3+ of value covered by real estate and a bank that the company will begin to monetize this year, and another €3+ of value covered by the core business."

Choice Equities Fund

The Choice Equities Fund generated losses of -17.4% on a net basis in the second quarter, taking the year-to-date performance to -34.6%. This compares to the Russell 2000’s -17.2% loss for the quarter and -23.5% loss year-to-date and the S&P 500’s loss of -16.1% for the quarter and -20.0% loss year-to-date.

Since its inception in 2017, the fund has generated annualized gains of +15.7% versus +5.6% and +12.0% for the Russell 2000 and S&P 500, respectively.

In the firm's second-quarter letter, Mitchell Scott, CFA Portfolio Manager, explained why Choice has decided to acquire a new holding in Crocs, Inc. (NASDAQ:CROX):

"Crocs, Inc. trades at 5x this year’s earnings and 6x EBITDA. Like many of its peers in the consumer space, the valuation implies the market regards the company as a one-time pandemic beneficiary, and business prospects offer little growth beyond this year...

I think this view is incomplete and neglects to incorporate the tremendous success the management team has achieved since they arrived five years ago.


Despite the initial share price reaction, the HeyDude acquisition looks quite promising, particularly when considering the company catapulted to half a billion dollars in sales and a low 30s EBITDA margin in just over a decade’s time.

Now Croc’s proven management team is intent on building on this strong start by bringing greater resources like increased marketing budgets and broader distribution to the promising brand...

Accordingly, the recent acquisition broadens Croc’s product line and adds another promising avenue of growth, positioning the company well to achieve its recent goals which imply multiyear sales and earnings CAGRs north of 20%. Insiders seem to agree the future is bright with several executives and board members making open market purchases all year long."