Alphyn Capital Management, an investment management firm, released its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. The Master Account of the fund returned 2.6% net in the fourth quarter compared to 2.4% for the S&P500 Index. As of fourth quarter 2024, the top ten holdings accounted for approximately 67% of the portfolio, and approximately 9% of the portfolio was held in cash. Despite the market cooling in December, the fund ended the year with a decent overall performance. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Alphyn Capital Management highlighted stocks like Distribution Solutions Group, Inc. (NASDAQ:DSGR) in the fourth quarter 2024 investor letter. Headquartered in Fort Worth, Texas, Distribution Solutions Group, Inc. (NASDAQ:DSGR) is a specialty distribution company. The one-month return of Distribution Solutions Group, Inc. (NASDAQ:DSGR) was -15.09%, and its shares gained 6.95% of their value over the last 52 weeks. On January 10, 2025, Distribution Solutions Group, Inc. (NASDAQ:DSGR) stock closed at $33.25 per share with a market capitalization of $1.557 billion.
Alphyn Capital Management stated the following regarding Distribution Solutions Group, Inc. (NASDAQ:DSGR) in its Q4 2024 investor letter:
“Distribution Solutions Group, Inc. (NASDAQ:DSGR) reported a 2.1% decline in organic revenue year-over-year, attributed to challenges in some end markets impacting its MRO, OEM, and specialty production supplies businesses. Management remains focused on factors it can control, namely optimizing cost structures and expanding its salesforce. Recent initiatives include the onboarding of 22 new sales representatives in Q3. It wants to have 900 representatives by year-end and 1,000 by mid-2025, supported by enhanced CRM tools and optimized sales territories to effectively target high-potential, greenfield markets.
DSGR has significantly accelerated the growth trajectory through M&A. Over the past two and a half years, the company has completed 11 acquisitions, contributing approximately $900 million in revenue, bringing total pro forma revenue to about $2 billion and EBITDA to around $200 million. DSGR is nearing the completion of cost reduction initiatives following the Hisco acquisition, bringing down the acquisition multiple from 8x EBITDA multiple to an effective 6x. The recent acquisition of Source Atlantic adds $180m of revenue. It expands DSGR’s presence in the Canadian market, while TestEquity’s acquisition of ConRes Test Equipment strengthens its rental and used equipment offerings in the Northeast. Furthermore, Gexpro’s acquisition of Tech-Component Resources in Singapore provides access to the region’s key tech and semiconductor clients.
DSGR is a smaller company with many moving parts, sized appropriately in our portfolios, but it has considerable upside potential if it continues executing its plan.”
A worker loading goods onto a truck in a distribution center.
Distribution Solutions Group, Inc. (NASDAQ:DSGR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 7 hedge fund portfolios held Distribution Solutions Group, Inc. (NASDAQ:DSGR) at the end of the third quarter which was 8 in the previous quarter. Distribution Solutions Group, Inc.’s (NASDAQ:DSGR) consolidated revenue for the third quarter increased 6.6% to $468 million. While we acknowledge the potential of Distribution Solutions Group, Inc. (NASDAQ:DSGR) 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 Distribution Solutions Group, Inc. (NASDAQ:DSGR) and shared Night Watch Investment Management’s views on the company. In addition, please check out our hedge fund investor letters Q4 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.