The first quarter completed a year since the pandemic descended upon us and a year when, remarkably, the portfolio rebounded more dramatically than after the 2008 – 2009 Financial Crisis. Your account specific results are on the enclosed “Performance Report”. For comparison, during the first quarter the Russell 2000 Value Index jumped 21.2%, the Russell 2000 Index rose 12.7%, while the larger capitalization S&P 500 nudged up 6.2%. (For index descriptions, please see the Client Login section of our website.)
The market’s focus today is on the forward pace of the recovery and how the rebound will affect different segments of the economy. The government stimulus and accrued consumer savings around the globe could lead to powerful economic momentum, which may particularly benefit smaller companies.
During the quarter, a new position was initiated in CECO Environmental. CECO’s new CEO is executing on a compelling vision for this industrial air and fluids handling company. The purchase of Hill International was completed in time for the proposed infrastructure bill. Hill’s construction project management services will be a winner with a spending increase. We added to your holdings in Enova International. Their acquisition of online business lender OnDeck is increasingly compelling. We believe dramatic accretion from the transaction will become apparent soon. Accelerating growth of Green Brick Partners led us to add to this position. Green Brick is tracking increased confidence in a strong and sustained home construction market in the Dallas area. Finally, we added to Vishay Precision Group. The improving order trends and strong earnings leverage the company is demonstrating excites us for the profitability this company can achieve with a solid economy.
We meaningfully reduced the position in both ChromaDex Corporation and Fluent when their respective share prices spiked. Still, we remain confident in the management teams and their strategic approach to their differentiated businesses. Notably, these timely trims caused higher than normal cash levels that are now being deployed. Apogee Enterprises was also trimmed, then sold in the second quarter, based on our heightened concerns of a gap in office construction; yet, the share price is up.
We are pleased to see your patience paying off. We believe the portfolio is positioned to continue to benefit from strongly developing catalysts and the low valuation relative to consensus earnings estimates. Form ADV Part 2 was e-mailed to you earlier this year. If you didn’t receive the e-mail and would like a copy, please contact us. Alternatively, it is also available on the TietonCapital.com website. As always, if the circumstances surrounding your account change such that you believe we should review the suitability of your assets managed by Tieton Capital, please contact us immediately. Thank you for your confidence!