Madison Investments, an investment advisor, released its “Madison Small Cap Fund” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund declined 1.06% outperforming a 3.28% decline for the Russell 2000 Index and a 4.27% decline for the Russell 2500 Index. In the second quarter, the small-cap market was weak. Strong stock selection drove the outperformance. In addition, you can check the fund’s top 5 holdings to know its best picks in 2024.
Madison Small Cap Fund highlighted stocks like FormFactor, Inc. (NASDAQ:FORM) in its Q2 2024 investor letter. FormFactor, Inc. (NASDAQ:FORM) manufactures and sells probe cards, analytical probes, probe stations, metrology systems, thermal systems, and cryogenic systems to semiconductor companies and scientific institutions. The one-month return of FormFactor, Inc. (NASDAQ:FORM) was -3.66%, and its shares gained 62.14% of their value over the last 52 weeks. On July 19, 2024, FormFactor, Inc. (NASDAQ:FORM) stock closed at $55.55 per share with a market capitalization of $4.287 billion.
Madison Small Cap Fund stated the following regarding FormFactor, Inc. (NASDAQ:FORM) in its Q2 2024 investor letter:
“Our top performing sector was Information Technology, followed by Consumer Discretionary and Consumer Staples. Strong stock selection drove our outperformance in Information Technology and Consumer Discretionary. In Consumer Staples, contribution was more balanced between selection and allocation. Our best stocks in these respective sectors were Form Factor (FORM), OneSpaWorld (OSW), and Primo Water Corp (PRMW).
FormFactor, Inc. (NASDAQ:FORM) is a semiconductor test equipment company with a clean, cash-rich balance sheet and very little competition. The moat in this business is very high as they integrate tightly with their customers, which are other test and semiconductor companies, and over many generations of products, making new entrants highly unlikely and market share shifts marginal. FORM’s business is driven by a simple equation: new designs plus an increase in test intensity drive revenue growth. Test intensity is defined as how much more testing a new chip design requires over prior generations. The AI DC buildout is driving demand for a new kind of memory chip called High Bandwidth Memory or HBM. Nvidia’s graphic processing units require HBM chips alongside them, and FORM has dominant market share at the current leading HBM maker SK Hynix. Test intensity for HBMs is estimated to be 25% higher than traditional memory. We continue to be optimistic about FORM’s fundamentals, with the understanding that quite a lot of optimism may already be reflected in the stock price.”
A technician soldering a cryogenic amplifier in a laboratory environment.
FormFactor, Inc. (NASDAQ:FORM) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held FormFactor, Inc. (NASDAQ:FORM) at the end of the first quarter which was 19 in the previous quarter. In the first quarter, FormFactor, Inc. (NASDAQ:FORM) reported $168.7 million in revenues a 0.3% increase from Q4 2023 and a 0.8% increase from Q1 2024. The first quarter revenues were above the midpoint of guidance range. While we acknowledge the potential of FormFactor, Inc. (NASDAQ:FORM) 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 FormFactor, Inc. (NASDAQ:FORM) and shared the list of best quantum computing stocks to invest in. In addition, please check out our hedge fund investor letters Q2 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.