Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” first quarter 2024 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund returned 3.36% compared to a 2.90% return for the Russell 2000 Value Index. Small value and small quality have outperformed over longer periods, although small caps have significantly underperformed over the past ten years. The firm focuses on the high-quality compounders in its portfolio. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
FPA Queens Road Small Cap Value Fund highlighted stocks like Concentrix Corporation (NASDAQ:CNXC) in the first quarter 2024 investor letter. Concentrix Corporation (NASDAQ:CNXC) offers technology-infused customer experience (CX) solutions. Concentrix Corporation’s (NASDAQ:CNXC) one-month return was -0.39%, and its shares lost 28.93% of their value over the last 52 weeks. On June 4, 2024, Concentrix Corporation (NASDAQ:CNXC) stock closed at $60.87 per share with a market capitalization of $4.017 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding Concentrix Corporation (NASDAQ:CNXC) in its first quarter 2024 investor letter:
“Concentrix Corporation (NASDAQ:CNXC) is one of two top customer experience (CX) vendors globally. The company started managing call centers but has since evolved into a high-tech business process outsourcer (BPO) that also designs and manages customer-facing websites and apps, integrates the data, and optimizes a client’s customer interactions. The company was spun out from TD Synnex, another of the Fund’s core holdings, and we have always been impressed with the company’s innovation and growth. CX is a relatively new business model, and Concentrix has been rolling up smaller competitors. In March, 2023 they bought WebHelp, a leading European CX player, for $4.8B in cash and stock. We believe the WebHelp acquisition will help consolidate an industry where Concentrix and Teleperformance are the largest players.
On Jan. 24, 2024 Concentrix reported Fiscal 2023 earnings that included weak 1% – 3% organic growth guidance for 2024. The market’s current concern about the potential of artificial intelligence to disrupt Concentrix’ core call center business has resulted in the underperformance in the shares across the industry. Concentrix has three turns of debt from the Webhelp deal which will be a problem if earnings deteriorate quickly. But Concentrix now trades at less than five times adjusted EPS. We think, but don’t know, that Concentrix’ domain knowledge and integration into customers’ workflows make for meaningful switching costs. We have held on to our Concentrix shares but have not added to the position.”
A digital dashboard detailing customer experience/user experience data.
Concentrix Corporation (NASDAQ:CNXC) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held Concentrix Corporation (NASDAQ:CNXC) at the end of the first quarter which was 20 in the previous quarter. The first quarter revenue of Concentrix Corporation (NASDAQ:CNXC) increased 47% as reported and nearly 3% on a pro forma constant currency basis. While we acknowledge the potential of Concentrix Corporation (NASDAQ:CNXC) 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 Concentrix Corporation (NASDAQ:CNXC) and shared the list of unstoppable growth stocks to buy. Concentrix Corporation (NASDAQ:CNXC) was in detractors’ list of FPA Queens Road Small Cap Value Fund in the previous quarter. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
