Giverny Capital Asset Management, LLC, an investment management company, recently published its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. The portfolio continued its strong performance in the fourth quarter, but trailed the S&P 500 Index. The portfolio returned 0.78% compared to a 2.41% return for the S&P 500 Total Return Index in the quarter. The fund returned 21.09% in 2024 compared to the 25.02% return for the Index during the same period. For more information on the fund’s top picks in 2024, please check its top five holdings.
In its fourth quarter 2024 investor letter, Giverny Capital Asset Management emphasized stocks such as Ferguson plc (NYSE:FERG). Ferguson plc (NYSE:FERG) is a plumbing and heating products distributor. The one-month return Ferguson Enterprises Inc. (NYSE:FERG) was 7.38%, and its shares lost 8.25% of their value over the last 52 weeks. On February 6, 2024, Ferguson Enterprises Inc. (NYSE:FERG) stock closed at $182.28 per share, with a market capitalization of $36.58 billion.
Giverny Capital Asset Management stated the following regarding Ferguson Enterprises Inc. (NYSE:FERG) in its Q4 2024 investor letter:
“Ferguson Enterprises Inc. (NYSE:FERG), purchased in 2023. Ferguson is the largest plumbing-supplies distributor in the United States. The company enjoys an enviable position as its suppliers are mostly unbranded purveyors of pipes, valves, toilets and the like, with only faucets having the strong brand names that command pricing power. Its customers are plumbing contractors who are mostly local and regional businesses. Ferguson is larger and financially stronger than either its suppliers or its customers, giving it considerable market power. The stock has been a so-so performer for us as US new housing construction has been weak in a high-interest rate environment. But Ferguson generates healthy levels of profit and free cash flow even in a weak construction economy and earns high returns on capital. There are many small plumbing distributors that Ferguson could acquire over time, increasing its scale advantages. Like IBP, the company should fare better should housing starts ever pick up. The PE multiple is 19x. Market Cap: $35 billion.”
A busy warehouse stocked with a variety of industrial plumbing parts.
Ferguson Enterprises Inc. (NYSE:FERG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 62 hedge fund portfolios held Ferguson Enterprises Inc. (NYSE:FERG) at the end of the third quarter which was 54 in the previous quarter. In the fiscal first quarter Ferguson Enterprises Inc. (NYSE:FERG) reported net sales $7.8 billion which was 0.8% ahead of prior year quarter. While we acknowledge the potential of Ferguson Enterprises Inc. (NYSE:FERG) 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 Ferguson Enterprises Inc. (NYSE:FERG) and shared the list of large-cap stocks insiders are buying. In addition, please check out our hedge fund investor letters Q3 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.