Why One Fund Bought $70 Milion in Darling Stock Despite a 15% Slide This Past Year
Key Points
San Francisco-based investment firm No Street added 2.25 million shares of Darling Ingredients for an estimated $69.5 million during the third quarter.
The new position represents 4.6% of the firm's 13F reportable assets under management as of September 30.
Though large, the stake is outside No Street's top five holdings at quarter-end.
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On Friday, San Francisco-based investment firm No Street GP LP disclosed a new position in Darling Ingredients (NYSE:DAR), acquiring 2.25 millino shares valued at approximately $69.5 million, according to an SEC filing.
What Happened
According to a filing with the U.S. Securities and Exchange Commission released on Friday, No Street reported a new investment in Darling Ingredients, acquiring nearly 2.3 million shares during the third quarter. The estimated value of the position at the end of the third quarter was $69.5 million, equal to 4.6% of the fund’s $1.5 billion in reportable U.S. equity holdings.
What Else to Know
Top holdings after the filing:
- NASDAQ:APP: $147.3 million (9.8% of AUM)
- NYSE:CVNA: $111.5 million (7.4% of AUM)
- NYSE:UBER: $107.8 million (7.2% of AUM)
- NASDAQ:WIX: $97.7 million (6.5% of AUM)
- NASDAQ:COOP: $94.9 million (6.3% of AUM)
As of Friday, shares of Darling Ingredients were priced at $34.75, reflecting a one-year decline of 15.4% and underperforming the S&P 500 by 30 percentage points over the same period.
Company Overview
| Metric | Value |
|---|---|
| Price (as of market close Friday) | $34.75 |
| Market capitalization | $5.5 billion |
| Revenue (TTM) | $5.8 billion |
| Net income (TTM) | $107.8 million |
Company Snapshot
Darling Ingredients Inc. is a leading global provider of sustainable natural ingredients, leveraging a broad asset base to convert animal by-products and residuals into high-value products. The company's scale and integration across multiple end markets support diversified revenue streams and operational resilience. Its strategic focus on bio-based solutions and environmental services positions it as a key supplier to industries seeking sustainable raw materials and specialty ingredients.
Foolish Take
The interesting pattern emerging in No Street’s recent moves is its willingness to lean into companies that have been repriced sharply lower. The firm added Wix after a multi-year slide, exited Crocs amid a reset, and is now building a sizable position in Darling Ingredients—a stock down more than 15% this year and well behind the broader market. Within a portfolio dominated by high-growth bets like AppLovin, Carvana, and Uber, Darling stands out as a cash-flow-centric industrial name that may offer a different kind of upside.
Darling’s third-quarter results help explain the appeal: Net sales rose to $1.6 billion from $1.4 billion a year ago, and net income increased modestly to $19.4 million (from $16.9 million one year earlier). The firm's core ingredients performance remains solid, with combined adjusted EBITDA up year over year to $244.9 million. The company also advanced a series of tax-credit monetizations—including a $125 million sale—with another $125 million to $175 million expected by year-end. Weakness remains in the Diamond Green Diesel joint venture, where EBITDA per gallon turned negative, but management expects policy tailwinds to improve margins.
At the end of the day, Darling is not a smooth ride, but its diversified ingredient portfolio, improving cash generation, and exposure to renewable fuels position it for a solid recovery. For patient investors, weakness in the stock may reflect short-term noise rather than long-term value erosion.
Glossary
13F reportable assets: The U.S. equity holdings that institutional investment managers must disclose quarterly to the Securities and Exchange Commission (SEC).
Assets under management (AUM): The total market value of investments managed by a fund or firm on behalf of clients.
Position: The amount of a particular security or asset held in a portfolio by an investor or fund.
Top holdings: The largest investments in a fund's portfolio, typically ranked by market value.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Forward price-to-earnings ratio: A valuation metric comparing a company's current share price to its forecasted earnings per share.
Enterprise value to EBITDA: A ratio comparing a company's total value (including debt) to its earnings before interest, taxes, depreciation, and amortization.
Vertically integrated model: A business structure where a company controls multiple stages of production or supply within its industry.
Bio-nutrients: Organic materials derived from biological sources, used to enhance food, feed, or agricultural products.
Bio-based solutions: Products or processes derived from renewable biological resources rather than fossil fuels.
Specialty ingredients: Unique or high-value components used in manufacturing food, feed, or industrial products.
Operational resilience: The ability of a company to maintain business functions during disruptions or market volatility.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies and Wix.com. The Motley Fool recommends Darling Ingredients and recommends the following options: short January 2026 $35 calls on Darling Ingredients. The Motley Fool has a disclosure policy.
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