Greystone Capital Management, an investment management company, released its fourth-quarter 2024 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the return for separate accounts managed by the firm ranged from +0.5 to +2.6%. The median account returned +1.7%, net of fees bringing the yearly returns to +19.9%. The strategy returned a cumulative +168.8% or +24.3% per year, net of fees, since inception in Q4 2019 and outperformed both the S&P 500 and the Russell 2000 by an annualized +6.0% and +14.1% per year. The results for the fourth quarter and FY2024 compare both negatively and positively to the returns of the S&P 500 and Russell 2000, which were +2.4% and +0.3% for the quarter and +25.0% and +11.5% for the entire year. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.
Greystone Capital Management highlighted stocks like Bel Fuse Inc. (NASDAQ:BELFB) in its Q4 2024 investor letter. Bel Fuse Inc. (NASDAQ:BELFB) designs, manufactures, markets, and sells products that power, protect, and connect electronic circuits. The one-month return of Bel Fuse Inc. (NASDAQ:BELFB) was -0.66%, and its shares gained 22.18% of their value over the last 52 weeks. On January 23, 2024, Bel Fuse Inc. (NASDAQ:BELFB) stock closed at $80.91 per share with a market capitalization of $1.03 billion.
Greystone Capital Management stated the following regarding Bel Fuse Inc. (NASDAQ:BELFB) in its Q4 2024 investor letter:
“Bel Fuse Inc. (NASDAQ:BELFB) was a strong contributor to performance this year, having exited a multi-year turnaround whereby CFO Farouq Tuweiq improved nearly every aspect of company operations, from pricing to cost structure, to capital allocation. Yet, the journey from here to there was made with little fanfare. In last year’s Q4 letter, I wrote that despite considerable evidence that earnings power has increased, Bel Fuse is still valued at a multiple below peers. My comment stands true today, but recent developments engender optimism that the gap will close.
With limited organic top line growth prospects, I envisioned Bel Fuse eventually looking to M&A to bolster their product set, geographic presence and top line growth. What I didn’t expect was the home-run acquisition they made in September, acquiring 80% of Enercon Technologies, an Israeli based electronics manufacturer, for $320 million. The acquisition not only provides immediate top line growth but gives Bel exposure to some of the most attractive end markets in the industry, namely aerospace and defense, by broadening their manufacturing base and providing them with significant R&D resources for new products. The deal also solidifies management’s operating prowess, demonstrating their ability to create value. The purchase was made without issuing stock, and the multiple paid presents the opportunity for strong earnings accretion.
Importantly, earn out targets as part of the deal call for Enercon to generate $43-50mm in EBITDA during 2025 and 2026. Based on my pro forma numbers for the deal, Bel could generate in excess of $140mm in EBITDA during 2025 and close to $150mm in 2026, against an enterprise value of less than $1.2B. Half of peer valuations is far too cheap for a quality business whose margins are now in line with peers and has sustainable top line growth for the first time in years. As Bel de-levers from the deal, management will resume share repurchases as well. Further upside remains.”
A close-up of a technician’s hands assembling electronic components on a circuit board.
Bel Fuse Inc. (NASDAQ:BELFB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held Bel Fuse Inc. (NASDAQ:BELFB) at the end of the third quarter which was 13 in the previous quarter. In the third quarter, Bel Fuse Inc’s. (NASDAQ:BELFB) sales declined 22.1% year-over-year to $123.6 million. While we acknowledge the potential of Bel Fuse Inc. (NASDAQ:BELFB) 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 Bel Fuse Inc. (NASDAQ:BELFB) and shared Greystone Capital Management’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q3 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.