Yahoo Finance Do You Think Charles Schwab Corp (SCHW) is an “Ugly Duckling”?
Blue Tower Asset Management, an asset management company, released its first quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund returned 13.78% net in the first quarter exceeding the broad market index’s gain so far this year. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Blue Tower Asset Management featured stocks like The Charles Schwab Corporation (NYSE:SCHW) in the first quarter 2024 investor letter. Headquartered in Westlake, Texas, The Charles Schwab Corporation (NYSE:SCHW) is a savings and loan holding company. On April 24, 2024, The Charles Schwab Corporation (NYSE:SCHW) stock closed at $75.19 per share. One-month return of The Charles Schwab Corporation (NYSE:SCHW) was 3.94%, and its shares gained 45.35% of their value over the last 52 weeks. The Charles Schwab Corporation (NYSE:SCHW) has a market capitalization of $137.368 billion.
Blue Tower Asset Management stated the following regarding The Charles Schwab Corporation (NYSE:SCHW) in its first quarter 2024 investor letter:
"Companies that have idiosyncratic, low-probability, high-magnitude risk can be described as “ugly ducklings.” These are companies where there is an aura of dread surrounding them. Hypothetical Example: Imagine an initially fairly-valued company has just become the defendant to a large class action lawsuit. Based on the facts of the case, there is a 90% chance the company will win the case. If they lose, they will go bankrupt, and if they win, they return to their initial value. In a rational world, the company should drop 10%. Often in the real world, a company in this position will drop 50% or more. If that happens, then an investor after the drop would have the opportunity to make an investment that will give them a 90% chance of doubling their investment or a 10% chance of losing their investment. Of course, in a real-world scenario, we will not have these exact probabilities given to us and must deal with rougher approximations and nuance.
An example of an ugly duckling which is currently in the Global Value portfolio is The Charles Schwab Corporation (NYSE:SCHW) which we discussed in our Q1 2023 letter. As interest rates have increased, fears of insolvency developed due to Schwab’s unrealized losses on their fixed income investments. These fears led to a selloff in the stock out of proportion to the low probability of bank failure."
Photo by Brendan Church on Unsplash
The Charles Schwab Corporation (NYSE:SCHW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, The Charles Schwab Corporation (NYSE:SCHW) was held by 81 hedge fund portfolios, up from 77 in the previous quarter, according to our database.
We previously discussed The Charles Schwab Corporation (NYSE:SCHW) in another article, where we shared Fiduciary Management Inc.'s views on the company. In addition, please check out our hedge fund investor letters Q1 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.
