Wasatch Global Investors, an asset management company, released its “Wasatch Micro-Cap Growth-U.S. Strategy” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. Micro-cap stocks saw a decline in the second quarter of this year following a robust start to the year due to a difficult macro environment and a narrowly focused market. Against this backdrop, the strategy fell but outperformed the Russell Microcap Growth Index benchmark, which fell -5.57%. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Wasatch Micro-Cap Growth-U.S. Strategy highlighted stocks like Dream Finders Homes, Inc. (NYSE:DFH), in the second quarter 2024 investor letter. Dream Finders Homes, Inc. (NYSE:DFH) is a holding company for Dream Finders Homes LLC that engages in the homebuilding business. The one-month return of Dream Finders Homes, Inc. (NYSE:DFH) was 7.69%, and its shares gained 20.52% of their value over the last 52 weeks. On September 11, 2024, Dream Finders Homes, Inc. (NYSE:DFH) stock closed at $31.07 per share with a market capitalization of $2.912 billion.
Wasatch Micro-Cap Growth-U.S. Strategy stated the following regarding Dream Finders Homes, Inc. (NYSE:DFH) in its Q2 2024 investor letter:
“The stocks of homebuilding companies were challenged in the second quarter because of affordability issues brought on by higher mortgage rates. While this has resulted in lower home sales, the structural undersupply of new homes nationally that’s persisted since the last housing crisis in the early 2000s has kept the industry from a more dramatic slowdown. Nevertheless, the strategy was negatively impacted by our holdings in two home builders.
The greatest detractor from strategy performance during the quarter was Dream Finders Homes, Inc. (NYSE:DFH), which designs, builds and sells single-family homes and apartments. The company offers entry-level homes and move-up homes as well as active adult homes and some custom homes. The stock price declined during the quarter along with the shares of many other homebuilders as the Fed failed to deliver any interest-rate cuts. Nevertheless, we’ve maintained our investment in Dream Finders. We like the company’s asset-light approach, which means Dream Finders doesn’t own the land it develops. Instead, the company uses purchase options to control lots for future development. This poses less risk in the event of a downturn since the company wouldn’t be left with a large inventory of lots that would be difficult to sell. Additionally, the company operates with a regional focus in higher population-growth areas—allowing it to leverage its overhead more efficiently.”
Aerial view of a residential subdivision under construction, highlighting the scale of the homebuilding business.
Dream Finders Homes, Inc. (NYSE:DFH) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held Dream Finders Homes, Inc. (NYSE:DFH) at the end of the second quarter which was 14 in the previous quarter. While we acknowledge the potential of Dream Finders Homes, Inc. (NYSE:DFH) 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 Dream Finders Homes, Inc. (NYSE:DFH) and shared Jim Cramer latest portfolio: List of stocks to buy and sell. 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.
