Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, the fund returned 2.38% compared to a -1.06 % return for the Russell 2000 Value Index. For the full year, the fund returned 10.76% compared to an 8.05% return for the index. The firm’s focus is on long-term performance, aiming to outperform the Russell 2000 Value Index with less risk throughout the entire market cycle. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
In its fourth quarter 2024 investor letter, FPA Queens Road Small Cap Value Fund emphasized stocks such as Concentrix Corporation (NASDAQ:CNXC). Concentrix Corporation (NASDAQ:CNXC) offers technology-infused customer experience (CX) solutions. The one-month return of Concentrix Corporation (NASDAQ:CNXC) was -11.13%, and its shares lost 35.90% of their value over the last 52 weeks. On March 4, 2025, Concentrix Corporation (NASDAQ:CNXC) stock closed at $42.45 per share with a market capitalization of $2.785 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding Concentrix Corporation (NASDAQ:CNXC) in its Q4 2024 investor letter:
“Concentrix Corporation (NASDAQ:CNXC) is one of two top customer experience (CX) vendors globally. The company began by managing call centers but has since evolved into a high-tech business process outsourcer (BPO) that also designs and runs customer-facing websites and apps, integrates the data, and optimizes a client’s customer interactions. The company was spun out from TD Synnex, another of the Fund’s core holdings. We have always been impressed with CNXC’s innovation and growth. CX is a relatively new business model, and Concentrix has been acquiring smaller competitors. In March, 2023 they bought WebHelp, a leading European CX player, for $4.8B in cash and stock.27 We believe the WebHelp acquisition will help consolidate an industry where Concentrix and Teleperformance are the largest players.
The market is currently concerned about the potential of artificial intelligence to disrupt Concentrix’ core call center business. All CX companies’ shares are down meaningfully over the past two years. On Sep. 25, 2024 CNXC stock declined significantly again when they released fiscal 2024 Q3 results and reduced revenue guidance. Fiscal 2024 organic revenue is now expected between -.5% and 1.5%. Concentrix has a debt to EBITDA ratio of 3x from the Webhelp deal that will be a problem if earnings deteriorate quickly. But Concentrix now trades at less than five times adjusted EPS and is highly cash generative. We think, but don’t know, that Concentrix’ domain knowledge and integration into customers’ workflows make for meaningful switching costs and that clients will be reluctant to let AI manage relationships with their customers.”
A digital dashboard detailing customer experience/user experience data.
Concentrix Corporation (NASDAQ:CNXC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 29 hedge fund portfolios held Concentrix Corporation (NASDAQ:CNXC) at the end of the fourth quarter which was 21 in the previous quarter. Concentrix Corporation (NASDAQ:CNXC) generated revenue of approximately $2.45 billion in the fourth quarter of 2024, growing 1.5% on a pro forma constant currency basis. While we acknowledge the potential of Concentrix Corporation (NASDAQ:CNXC) 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 Concentrix Corporation (NASDAQ:CNXC) and shared the list of best information technology services stocks to buy. In addition, please check out our hedge fund investor letters Q4 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.