Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, its Investor Class fund ARTQX returned -5.37%, Advisor Class fund APDQX posted a return of -5.34%, and Institutional Class fund APHQX returned -5.28, compared to a -3.40% return for the Russell Midcap Value Index. Markets contracted in Q2 after widespread market participation drove US stocks upward in late 2023 and early 2024, with a few mega-cap technology names pushing the S&P 500 Index to all-time highs. Healthcare and consumer discretionary holdings held back the portfolio’s performance relative to the index. Financials, industrials, and technology holdings outperformed on the positive side. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Artisan Mid Cap Value Fund highlighted stocks like LKQ Corporation (NASDAQ:LKQ), in the second quarter 2024 investor letter. LKQ Corporation (NASDAQ:LKQ) distributes vehicle products and parts to repair, maintain, and accessorize automobiles. The one-month return of LKQ Corporation (NASDAQ:LKQ) was -5.20%, and its shares lost 25.81% of their value over the last 52 weeks. On August 6, 2024, LKQ Corporation (NASDAQ:LKQ) stock closed at $39.59 per share with a market capitalization of $10.422 billion.
Artisan Mid Cap Value Fund stated the following regarding LKQ Corporation (NASDAQ:LKQ) in its Q2 2024 investor letter:
“In the health care and consumer discretionary sectors, Baxter International and LKQ Corporation (NASDAQ:LKQ) were key detractors. LKQ is the dominant player in salvage/aftermarket collision parts distribution in North America, with over 70% market share. In addition to continued cost inflation, lower-than-expected collision claims in North America due partly to a mild winter resulted in disappointing quarterly earnings. What was already a cheap stock when we initiated our position in January of this year has become even cheaper. At a 10X P/E, shares trade at a distinct discount to their historical 10-year average of 14X and are also cheaper relative to LKQ’s auto parts retailer peers, which arguably have similar long-term growth profiles. LKQ isn’t a fast-growing business, but it can grow 2% to 4%, and given its dominant market share and mid-teens return on tangible capital, we believe it should trade at a higher valuation. Over the last decade, LKQ has also become the largest mechanical parts distributor in Europe. As is the case in North America, independent European mechanics value LKQ’s reliable distribution and competitive pricing. The European business has improved operationally over the last five years as LKQ has focused on the integration of its various acquisitions to drive margin and free cash flow improvements. LKQ operates in end markets with limited cyclicality as 90% of revenues are tied to non-discretionary spending and reliably has strong free cash flow generation. The company also meets our requirement for a sound financial condition as its debt load is manageable at 2X EBITDA due to its attractive free cash flow. We added to our position on weakness.”
A worker in a factory using a robotic arm to assemble automotive body panels.
LKQ Corporation (NASDAQ:LKQ) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held LKQ Corporation (NASDAQ:LKQ) at the end of the first quarter which was 25 in the previous quarter. While we acknowledge the potential of LKQ Corporation (NASDAQ:LKQ) 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 another article, we discussed LKQ Corporation (NASDAQ:LKQ) and shared ClearBridge Sustainability Leaders Strategy’s views on the company. Artisan Mid Cap Value Fund established a position in LKQ Corporation (NASDAQ:LKQ) during Q1 2024. 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.
