SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun SMID Cap Strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. The third quarter of 2024 has reinforced the effectiveness of SouthernSun’s investment philosophy. In the third quarter, the strategy returned 8.98% on a gross basis (8.76% net) compared to an 8.75% return for the Russell 2500 Index and 9.63% for the Russell 2500 Value Index. The fund returned 23.93% on a gross basis (23.00% net) over the trailing 12 months compared to 26.17% and 26.59% returns for the indexes respectively over the same period. In addition, please check the top 5 holdings of the strategy to know its best pick in 2024.
SouthernSun SMID Cap Strategy highlighted stocks like APi Group Corporation (NYSE:APG), in the third quarter 2024 investor letter. APi Group Corporation (NYSE:APG) is a safety and specialty services provider. The one-month return of APi Group Corporation (NYSE:APG) was 9.88%, and its shares gained 31.24% of their value over the last 52 weeks. On November 4, 2024, APi Group Corporation (NYSE:APG) stock closed at $35.25 per share with a market capitalization of $9.686 billion.
SouthernSun SMID Cap Strategy stated the following regarding APi Group Corporation (NYSE:APG) in its Q3 2024 investor letter:
“APi Group Corporation (NYSE:APG) is a leading business services provider of fire and life safety, security, elevator and escalator, and specialty services in over 500 locations worldwide. The company has two segments: Safety Services (~74% of EBITDA) and Specialty Services (~26% of EBITDA). The majority of profits in Safety Services come from the design, installation, inspection, and servicing of fire sprinkler systems, which are required by law in most commercial buildings such as offices, schools, hospitals, warehouses, and data centers. These systems are also required by law to be inspected at least annually. Although the design and installation of these systems are high dollar projects (can be millions of dollars), profitability is often low. However, the inspection and servicing of these systems is higher margin and recurring in nature.
APG is strategically focused on pursuing inspection and service first, as opposed to design and installation. This strategy requires philosophical buy-in from the local branch manager, and additional sales personnel at the branch. Over the last four years, APG has successfully driven double digit organic growth in inspections in North America and is in the early stages of implementing this strategy in its international business, Chubb Fire and Security (acquired in 2022). We believe this strategic focus will deliver market share gains and together with price increases, result in mid-single digit organic revenue growth in the Safety Services segment, with earnings growing faster as the mix shifts to higher margin inspection and services…” (Click here to read the full text)
A team of engineers surveying a construction site in preparation for a new underground infrastructure.
APi Group Corporation (NYSE:APG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 52 hedge fund portfolios held APi Group Corporation (NYSE:APG) at the end of the second quarter which was 39 in the previous quarter. APi Group Corporation’s (NYSE:APG) third quarter revenue increased 2.4% to $1.83 billion from $1.78 billion in the prior year period. While we acknowledge the potential of APi Group Corporation (NYSE:APG) 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 APi Group Corporation (NYSE:APG) and shared the list of best engineering stocks to invest in. 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.