Scout Investments, Inc, an affiliate of Carillon Tower Advisers, released the “Carillon Scout Mid Cap Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The Russell Midcap® Index fell in Q2 as investors prioritized mega-cap technology businesses over smaller ones. IT, communications, and utilities were among the midcap industries with significant links to AI and attractive returns, as they matched the power requirements of AI servers. Surprisingly, the generally less cyclical consumer staples and healthcare sectors underperformed despite the index’s negative returns in the quarter. Overall, the U.S. economy appears steady going into the second half of the year. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Carillon Scout Mid Cap Fund highlighted stocks like Builders FirstSource, Inc. (NYSE:BLDR) in the second quarter 2024 investor letter. Based in Irving, Texas, Builders FirstSource, Inc. (NYSE:BLDR) is a building material, manufactured components, and construction services provider. The one-month return of Builders FirstSource, Inc. (NYSE:BLDR) was 3.27%, and its shares gained 21.89% of their value over the last 52 weeks. On September 9, 2024, Builders FirstSource, Inc. (NYSE:BLDR) stock closed at $166.16 per share with a market capitalization of $19.35 billion.
Carillon Scout Mid Cap Fund stated the following regarding Builders FirstSource, Inc. (NYSE:BLDR) in its Q2 2024 investor letter:
“Builders FirstSource, Inc. (NYSE:BLDR), a large U.S. distributor to homebuilders, primarily suffered due to a severe slowdown in multifamily housing units, and more recently, fears of a slowing single-family residential housing market. The company’s gross margins had risen dramatically over recent years as it increased the value-added portion of its business significantly. It delivers pre-built “truss structures,” plus pre-built windows and doors, and provides millwork services that help contractors save money and time. Bears are concerned about the sustainability of profit margins, but management remains confident in the structurally higher margin profile of the business compared to previous cycles. Its strong returns have allowed the company to repurchase a meaningful amount of the shares outstanding since 2022.”
A crane lifting a truss during the construction of a new building.
Builders FirstSource, Inc. (NYSE:BLDR) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 59 hedge fund portfolios held Builders FirstSource, Inc. (NYSE:BLDR) at the end of the second quarter which was 72 in the previous quarter. In the second quarter, Builders FirstSource, Inc. (NYSE:BLDR) reported net sales of $4.5 billion, fell 1.6% year-over-year, driven by a 3.8% decline in core organic sales, reflecting the expected slowdown in multi-family housing segment. While we acknowledge the potential of Builders FirstSource, Inc. (NYSE:BLDR) 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 Builders FirstSource, Inc. (NYSE:BLDR) and shared Jim Cramer’s list of go-to stocks for success. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
