Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund returned -2.62% compared to a -3.64% return for the Russell 2000 Value Index. In the first half of 2024, the fund returned 0.65% versus -0.85% for the index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
FPA Queens Road Small Cap Value Fund highlighted stocks like Fabrinet (NYSE:FN) in the second quarter 2024 investor letter. Fabrinet (NYSE:FN) offers optical packaging and precision optical, electro-mechanical, and electronic manufacturing services. Fabrinet’s (NYSE:FN) one-month return was -17.98%, and its shares gained 79.84% of their value over the last 52 weeks. On August 13, 2024, Fabrinet (NYSE:FN) stock closed at $217.75 per share with a market capitalization of $7.871 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding Fabrinet (NYSE:FN) in its Q2 2024 investor letter:
“Fabrinet (NYSE:FN) is a contract manufacturer of optical communications components and modules. The company has a dominant position in hard-to-replicate precision-manufacturing technologies and an enviable track record of execution. The majority of Fabrinet’s sales are to networking equipment manufacturers, but it has been successfully diversifying into the data center, industrial, auto, and medical end-markets. FN’s stock jumped after reporting June 2023 earnings – datacenter sales increased 50% sequentially and more than 100% over the previous year, driven by their 800-gigabyte transceivers for Artificial Intelligence applications. The company also announced that Nvidia is a 10%+ customer.
Fabrinet was a top-five holding in the Fund before its June 2023 earnings announcement. Since then, the stock has appreciated considerably and we have trimmed in keeping with our risk management policies. Given the growth in its forward earnings estimates, Fabrinet trades in line with its historical earnings multiples and remains a top five position for us.”
A technician with a laptop looking over a complex optical transport network system.
Fabrinet (NYSE:FN) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held Fabrinet (NYSE:FN) at the end of the first quarter which was 24 in the previous quarter. The third quarter results of Fabrinet (NYSE:FN) were above the guidance range. With $731.5 million in revenue, 10% higher than the same period of last year and 3% higher than the prior quarter. While we acknowledge the potential of Fabrinet (NYSE:FN) 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 Fabrinet (NYSE:FN) and shared the list of most important AI companies you should pay attention to. Fabrinet (NYSE:FN) was featured on the FPA Queens Road Small Cap Value Fund’s TTM Contributors list from the prior quarter. 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.
