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Is it a Good Move to Invest in RH?

Miller Value Partners, an investment management firm, published its “Miller Opportunity Equity” fourth quarter 2022 investor letter – a copy of which can be seen here. A quarterly net increase of 1.85% has been recorded by the fund for the fourth quarter of 2022, below the S&P 500 Index’s 7.56% gain for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

In its Q3 2022 investor letter, Miller Value Partners Opportunity Equity Fund mentioned RH (NYSE:RH) and explained its insights for the company. Founded in 1979, RH (NYSE:RH) is a Corte Madera, California-based home-furnishings company with a $6.9 billion market capitalization. RH (NYSE:RH) delivered a 12.44% return since the beginning of the year, while its 12-month returns are down by -27.79%. The stock closed at $300.43 per share on January 17, 2023.

Here is what Miller Value Partners Opportunity Equity Fund has to say about RH (NYSE:RH) in its Q3 2022 investor letter:

“Our results have disappointed and diverged from most value managers recently. That’s primarily attributable to our willingness to invest early in companies we believe are long-term secular winners. These securities remain strong contributors to our longer-term results.

A small percentage of companies (4%) drive all the market’s wealth creation over long periods of time.  It would seem sensible, then, to try to identify these opportunities. And we do. The very best value investors benefitted from investing early in companies that compound(ed) capital over long periods (eg- Buffett and Ben Graham with Geico; Bill Miller with Amazon). But many rule them out based on accounting metrics that appear expensive.

We explicitly look for these sorts of opportunities as part of our process. This has significantly enhanced our long-term performance. Amazon, RH (NYSE:RH) and Farfetch (given our sales at higher prices) are all top contributors over the last decade.”

Our calculations show that RH (NYSE:RH) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. RH (NYSE:RH) was in 48 hedge fund portfolios at the end of the second quarter of 2022, compared to 59 funds in the previous quarter. RH (NYSE:RH) delivered a 27.45% return in the past 3 months.

In September 2022, we also shared another hedge fund’s views on RH (NYSE:RH) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q4 2022 page.


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Disclosure: None. This article is originally published at Insider Monkey.

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