Gentherm Stock Down 60% Since 2022 — But One Hedge Fund Just Bought 431,072 Shares

On November 14, New York-based Harvey Partners disclosed in an SEC filing that as of September 30, it had bought 431,072 shares of Gentherm (NASDAQ:THRM), increasing the stake by approximately $18.1 million.

What Happened

According to a Securities and Exchange Commission (SEC) filing dated November 14, Harvey Partners boosted its holding in Gentherm by 431,072 shares during the third quarter. The firm’s position as of September 30 stood at about 1 million shares with a market value of $34.9 million.

What Else to Know

This buy brings the Gentherm stake to 3.1% of Harvey Partners’ reportable U.S. equity AUM, below the top five fund holdings.

Top holdings after the filing:

• NYSE: NPO: $56.3 million (5.1% of AUM)
• NYSE: BWXT: $53.4 million (4.9% of AUM)
• NYSE: AZZ: $53 million (4.8% of AUM)
• NASDAQ: GLDD: $44.4 million (4% of AUM)
• NASDAQ: ADEA: $43.9 million (4% of AUM)

As of Friday, shares of Gentherm were priced at $36.46, down 13% over the past year and well underperforming the S&P 500, which is instead up 13% in the same period.

Company Overview

Company Snapshot

• Gentherm offers thermal management technologies, including climate comfort systems for automotive interiors, battery performance solutions, and patient temperature management systems for medical applications.
• The company generates revenue primarily through the design, manufacture, and sale of automotive parts and systems to original equipment manufacturers (OEMs), first-tier suppliers, and aftermarket distributors.
• Its main customer base consists of global automotive OEMs, seat manufacturers, and healthcare providers across North America, Europe, and Asia.

Gentherm is a leading supplier of thermal management solutions, serving the global automotive and medical sectors. The company leverages advanced proprietary technologies to provide climate comfort and battery performance products, supporting innovation in vehicle electrification and passenger comfort. Gentherm's diversified product portfolio and established relationships with major OEMs underpin its competitive position in the auto parts industry.

Foolish Take

Despite a bruising multiyear selloff, a move into a deeply discounted name like Gentherm signals that Harvey Partners may see the beginnings of a turnaround forming. The company just posted record quarterly revenue and strong operating cash flow, suggesting that operational footing is firmer than the stock chart implies—a dynamic long-term investors often look for when sentiment disconnects from fundamentals.

Harvey Partners’ third-quarter purchase brought its Gentherm holdings to roughly 1 million shares valued at $34.9 million, lifting the position to 3.1% of reportable assets. That keeps it below the fund’s top weightings but is still pretty meaningful.

Gentherm’s third-quarter report strengthened the case. Revenue rose 4% year over year to a record $386.9 million, buoyed by 8.6% growth in automotive climate and comfort solutions. Adjusted EBITDA ticked up to $49 million, margins remained healthy at 12.7%, and the company generated $87.8 million in year-to-date operating cash flow (up from $73.1 million in the prior year). Management also secured $745 million in new automotive awards, keeping it on pace for more than $2 billion this year—a sign its core technologies continue to win share even as material costs pressure gross margins.

Glossary

13F AUM: The total value of U.S. equity securities reported by an institutional investment manager on SEC Form 13F.
Enterprise value to EBITDA ratio: A valuation metric comparing a company's total value to its earnings before interest, taxes, depreciation, and amortization.
Forward price/earnings ratio: A valuation metric using forecasted earnings to assess how much investors are paying per dollar of future profit.
Original equipment manufacturers (OEMs): Companies that produce parts or equipment that may be marketed by another manufacturer, often in the automotive industry.
Aftermarket distributors: Businesses that sell replacement parts, accessories, or equipment for vehicles after the original sale.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Fund AUM: The total market value of assets managed by an investment fund.
Position: The amount of a particular security or investment held by an individual or institution.
Stake: The ownership interest or share held in a company by an investor or fund.
Climate comfort systems: Technologies designed to regulate temperature for passenger comfort in vehicle interiors.
Battery performance solutions: Products or technologies aimed at improving battery efficiency, lifespan, or reliability, especially in automotive applications.
First-tier suppliers: Companies that supply parts or systems directly to original equipment manufacturers (OEMs), especially in the automotive sector.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Azz and BWX Technologies. The Motley Fool has a disclosure policy.