1 Main Capital’s New Position: Barnes & Noble Education (BNED)

1 Main Capital, a boutique investment firm, released its second-quarter 2024 investor letter. A copy of the same can be downloaded here. In the second quarter, the fund returned 12.8% net, and expenses compared to 4.3% and (3.3)% for the S&P 500 (SPX) and Russell 2000 (RTY). Year-to-date the Fund delivered 7.0% net, compared to 15.3% and 1.7% for the SPX and RTY. In the first half of the year, large-cap stocks (SPX) outperformed small-cap stocks (RTY) by a significant margin. However, the rally in large-cap stocks was mainly fueled by just a handful of major winners. In addition, you can check the fund's top 5 holdings to find out its best picks for 2024.

1 Main Capital highlighted stocks like Barnes & Noble Education, Inc. (NYSE:BNED) in its Q2 2024 investor letter. Barnes & Noble Education, Inc. (NYSE:BNED) operates bookstores for college and university campuses, and K-12 institutions. The one-month return of Barnes & Noble Education, Inc. (NYSE:BNED) was 64.22%, and its shares lost 93.16% of their value over the last 52 weeks. On July 26, 2024, Barnes & Noble Education, Inc. (NYSE:BNED) stock closed at $10.05 per share with a market capitalization of $263.39 million.

1 Main Capital stated the following regarding Barnes & Noble Education, Inc. (NYSE:BNED) in its Q2 2024 investor letter:

"During the second quarter the Fund initiated an opportunistic investment in Barnes & Noble Education, Inc. (NYSE:BNED) after the company announced a highly dilutive rights offering to recapitalize itself.

BNED, which was spun out of Barnes & Noble in 2015, is the largest operator of college bookstores across the US with 1,245 bookstores (55% physical / 45% virtual), serving nearly 6 million students. Since the spin, the company has faced increasing competitive pressures from eTextbooks, rentals and piracy.

In response to these pressures, BNED launched First Day Complete (FDC), which provides students with required course materials prior to the first day of class at below market rates. When schools sign up for FDC, students are automatically enrolled, with an opt-out rate of less than 20%. As a result of significantly higher sell-through rates, BNED typically enjoys a course material revenue and gross profit uplift of nearly 80% and 100%, respectively, upon adoption…” (Click here to read the full text)

An aerial view of a well-stocked bookstore, with customers browsing inside.

Barnes & Noble Education, Inc. (NYSE:BNED) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held Barnes & Noble Education, Inc. (NYSE:BNED) at the end of the first quarter which was 9 in the previous quarter. While we acknowledge the potential of Barnes & Noble Education, Inc. (NYSE:BNED) 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 addition, please check out our hedge fund investor letters Q2 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.