Madison Investments, an investment management firm, released its “Madison Investments U.S. Equity Strategy ” Q4 2023 investor Letter. A copy of the same can be downloaded here. In 2023, the US stock market experienced a positive year. The S&P 500 Index ended 2023 up 26.3%, having recovered all of its 2022 decline and a little bit more. The year’s most notable feature was the glaring concentration of returns in the Magnificent Seven. With an average annual return of 111.7%, these seven megacap technology firms accounted for considerably over half of the S&P 500’s entire gain. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Madison Investments U.S. Equity Strategy featured stocks such as Moelis & Company (NYSE:MC) in its Q4 2023 investor letter. Headquartered in New York, New York, Moelis & Company (NYSE:MC) is an investment banking advisory firm. On February 16, 2024, Moelis & Company (NYSE:MC) stock closed at $55.71 per share. One-month return of Moelis & Company (NYSE:MC) was -0.29%, and its shares gained 22.74% of their value over the last 52 weeks. Moelis & Company (NYSE:MC) has a market capitalization of $3.714 billion.
Madison Investments U.S. Equity Strategy stated the following regarding Moelis & Company (NYSE:MC) in its fourth quarter 2023 investor letter:
“However, we don’t entirely avoid cyclical companies if we feel the valuation is compelling and the long-term outlook is sufficiently attractive.
An example of that would be Moelis & Company (NYSE:MC), a boutique investment bank that specializes in mergers and acquisitions (M&A) and restructuring advice. M&A is a notoriously cyclical industry, similar to another industry we will discuss, semiconductors. Much like semiconductors, it has a history of secular growth and prospects for similar growth in the future appear good as well. In addition, we believe that Moelis has an organizational culture that makes it almost unique in the M&A advisory business – in the infamously individualistic industry, it has added a healthy dollop of teamwork ethos. In a business where your primary assets walk out the door every evening to go home, this is a crucial feature for the sustainability of your franchise.
When we invested in mid-2020, Moelis’s revenues were under pressure from the pandemic that had virtually shut down merger activity, and the company was losing money. Yet, we knew that at some point, M&A activity would resume, and we also could see that the company had the balance sheet to withstand a protracted period of low M&A activity. The stock traded for what we calculated as a single-digit P/E on future earning power. In contrast to our recent semiconductor investments, we were fortunate on the timing, and the industry recovered shortly after. While we believe our insights into the specific qualities and strengths of Moelis have been a meaningful contributing factor to the investment’s success thus far, a larger contribution can perhaps be attributed to our willingness to look through the downturn, and not attempt to make a precise prediction on when a recovery would occur. When J.P. Morgan was once asked whether he prognosticated a recession or an economic boom, he answered simply, “yes.” That’s how we valued Moelis.”
A business professional banking from their laptop, taking advantage of the company’s investment services.
Moelis & Company (NYSE:MC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Moelis & Company (NYSE:MC) was held by 17 hedge fund portfolios, down from 10 in the previous quarter, according to our database.
We discussed Moelis & Company (NYSE:MC) in another article and shared Madison Investments’ views on the company. In addition, please check out our hedge fund investor letters Q4 2023 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.
