New $17 Million Bet on STAAR Surgical Comes as Sales Jump 7% and Margins Hit 82%

Dallas-based Slotnik Capital initiated a new position in STAAR Surgical Company (NASDAQ:STAA) during the third quarter, acquiring 635,000 shares valued at approximately $17.06 million, according to a November 13 SEC filing.

What Happened

According to a recent SEC filing dated November 13, Slotnik Capital disclosed a new investment in STAAR Surgical Company (NASDAQ:STAA). The fund reported purchasing 635,000 shares during the third quarter, establishing a stake valued at $17.06 million as of September 30. This new position comprised 5.33% of the fund’s reportable U.S. equity holdings.

What Else to Know

Top holdings after the filing:

• NASDAQ: FYBR: $44.19 million (15.93% of AUM)
• NASDAQ: EA: $42.36 million (15.27% of AUM)
• NASDAQ: LBRDK: $39.35 million (14.18% of AUM)
• NYSE: NSC: $29.80 million (10.74% of AUM)
• NASDAQ: VRNA: $18.23 million (6.57% of AUM)

As of Tuesday, shares of STAAR Surgical Company were priced at $23.20, down about 4% over the past year and well underperforming the S&P 500, which is instead up nearly 17%.

Company Overview

Company Snapshot

• STAAR Surgical develops and markets implantable lenses for the eye, including the Visian ICL family for myopia, hyperopia, astigmatism, and presbyopia, as well as preloaded silicone cataract intraocular lenses and injector systems.
• The company generates revenue primarily through the sale of implantable lenses and related surgical delivery systems, focusing on innovative vision correction solutions.
• Its main customers are ophthalmic surgeons, vision and surgical centers, hospitals, government facilities, and distributors, with a global presence in the United States, Asia, and Europe.

STAAR Surgical Company is a specialized medical device manufacturer focused on advanced implantable lenses for vision correction and cataract surgery. With a global footprint and a portfolio centered on proprietary lens technologies, the company targets unmet needs in refractive and cataract surgery markets. Its competitive position is supported by ongoing innovation and a direct sales approach to eye care professionals worldwide.

Foolish Take

STAAR just delivered a quarter that showed why it still commands a premium position even as shares struggle to pick up ground. Net sales rose to $94.7 million, up nearly 7% year over year, while gross margins surged to 82.2%, helped by payment recognition on a prior China shipment and tighter cost controls. Even stripping out the accounting noise, sales outside China grew close to 8%, a healthier signal than headline volatility suggests.

As for the balance sheet, STAAR ended the quarter with roughly $193 million in cash and investments and no debt, giving it room to navigate uneven demand in Asia while continuing buybacks. Meanwhile, adjusted EBITDA more than doubled year over year to $34.6 million, reflecting a leaner operating model after cost reductions earlier in the year.

This new position sits alongside holdings like Fiber, Electronic Arts, and Norfolk Southern, suggesting comfort with businesses that have durable franchises but cyclical sentiment -- a mold that STAAR seems to mesh well with.

Glossary

13F AUM: The total market value of U.S. equity securities reported by an institutional investment manager in its quarterly SEC Form 13F filing.
New position: An investment in a security that a fund or investor did not hold in the previous reporting period.
Top holdings: The largest investments in a fund's portfolio, usually ranked by market value or percentage of assets.
Stake: The amount or percentage of ownership an investor or fund holds in a company.
Reportable positions: Securities holdings that must be disclosed in regulatory filings, such as the SEC's Form 13F.
Implantable lenses: Medical devices surgically placed in the eye to correct vision problems like myopia or cataracts.
Ophthalmic surgeons: Medical doctors specializing in surgical procedures related to the eyes.
Proprietary lens technologies: Unique, company-owned designs or processes for manufacturing specialized eye lenses.
Direct sales approach: A business strategy where a company sells products directly to customers, bypassing third-party distributors.
Refractive surgery: Surgical procedures intended to correct common vision problems, reducing dependence on glasses or contact lenses.
TTM: The 12-month period ending with the most recent quarterly report.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Electronic Arts and Liberty Broadband. The Motley Fool has a disclosure policy.