ClearBridge Investments, an investment management company, released its “ClearBridge Sustainability Leaders Strategy” second quarter 2024 investor letter. A copy of the same can be downloaded here. U.S. stocks increased during a difficult quarter for diversified portfolios due to the market leadership remaining centered around a few mega-cap firms that were thought to be the major winners in the expanding AI industry. The benchmark Russell 3000 Index returned 3.22% in the quarter. The strategy underperformed the benchmark in the second quarter and had gains in four of 10 sectors in which it was invested, on an absolute basis. Overall stock selection detracted the most, mainly stock selection in the IT, consumer discretionary, health care, industrials, and real estate sectors. Please check the top 5 holdings of the strategy, to know its best pick in 2024.
ClearBridge Sustainability Leaders Strategy highlighted stocks like Eastman Chemical Company (NYSE:EMN), in the second quarter 2024 investor letter. Eastman Chemical Company (NYSE:EMN) is a specialty materials company headquartered in Kingsport, Tennessee. The one-month return of Eastman Chemical Company (NYSE:EMN) was -0.87%, and its shares gained 13.48% of their value over the last 52 weeks. On July 12, 2024, Eastman Chemical Company (NYSE:EMN) stock closed at $98.64 per share with a market capitalization of $11.6 billion.
ClearBridge Sustainability Leaders Strategy stated the following regarding Eastman Chemical Company (NYSE:EMN) in its Q2 2024 investor letter:
“Helping companies meet these new rules will be ClearBridge holding Eastman Chemical Company (NYSE:EMN), which makes a range of advanced materials, chemicals and fibers for everyday purposes, among them plastics for food packaging. In a recent engagement with Eastman Chemical we discussed two different chemical recycling technologies it has developed: polyester renewal technology (‘PRT’) and carbon renewal technology (‘CRT’). PRT recycles polyester-based materials such as soda bottles, carpet fibers and even clothing, breaking down their basic molecules until they are indistinguishable from materials made from virgin or nonrecycled content. CRT operates in a similar way but can take a broader range of plastic types and replaces the use of coal as a feedstock to make fibers. Combining these two technologies gives Eastman a competitive advantage in molecular recycling, as it can take most types of waste plastics (Exhibit 1). Ironically, securing feedstock (i.e., waste plastic) has been a bottleneck to scaling molecular recycling as competitor technologies not using Eastman’s dual technologies often require the waste plastic to be separated purely according to grade, which waste and recycling companies do not readily offer. Eastman’s dual technology approach allows it to accept most plastic grades, making it less reliant on waste companies’ sorting.
Eastman’s first recycling plant is now operational in Tennessee, which will supply its internal Advanced Materials lines while also proving out the technology. The company is already working toward a second plant in Texas that will have Pepsi (PEP) as its anchor customer. In the second plant, not only will Eastman help Pepsi meet its recycled content goals, but it is also expected to receive long-term, take-or-pay volume commitments, for doing so. This should greatly improve earnings visibility, and in turn, potentially valuation…” (Click here to read the full text)
A close-up of a chemist in a white lab coat, mixing raw materials for specialty products.
Eastman Chemical Company (NYSE:EMN) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held Eastman Chemical Company (NYSE:EMN) at the end of the first quarter which was 31 in the previous quarter. While we acknowledge the potential of Eastman Chemical Company (NYSE:EMN) 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 Eastman Chemical Company (NYSE:EMN) and shared the list of best plastics and rubber stocks to buy. 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.
