15. Belden Inc. (NYSE:BDC)
Year To Date Share Price Gain: 56.34%
Number of Hedge Fund Investors in Q2 2024: 16
Belden Inc. (NYSE:BDC) is a data center operations and connectivity equipment provider. The firm’s products include copper cables, fiber cables, panels, cooling products, and airflow management products. These expose it directly to the growing data center market and imply that even if AI demand fails to take off, Belden Inc. (NYSE:BDC) will still be well positioned to benefit from pent up enterprise IT spending from the high interest rates. Its exposure to the data center industry has also allowed the firm to achieve sizeable revenue growth. Between 2020 and 2023, Belden Inc. (NYSE:BDC)’s revenue has grown from $1.7 billion to $2.5 billion, or by 47%. This hasn’t stopped the firm from focusing on growth, and it acquired a fiber company earlier this year to further increase broadband market penetration, particularly for enterprise and data center users. Over the long term, Belden Inc. (NYSE:BDC) expects its broadband revenue to account for 20% of its sales compared to the current figure of roughly 10%.
Belden Inc. (NYSE:BDC) management believes that the acquisition will help it penetrate the data center market. Here is what they shared during the Q2 2024 earnings call:
“So if you really look at Precision Optical Technologies, they’ve spent a lot of time building this position as a value-added supplier of optical transceivers with a lot of proprietary software and configuration capability, right, I think that’s unique. In many ways, that’s a little bit similar to how, for example, you can think of our active products on the industrial side. So you have this one capability that’s extremely differentiated, very sticky. And then, as a result, every time, for example, a big MSO customer has to do new infrastructure deployment or upgrades or any changes, it always starts at that end of their, let’s say, data center, where Precision is plugged in and all the discussions then come down to architectural design, so that they work through linked loss budgets and go from end to end, and then — so Precision was covering both ends.
Our Broadband business, pre-Precision, was covering that middle ground. And now we’re in a position where we connect all of that end-to-end, right? So we now participate — or we can participate in more systems architectural discussions. So how is that going? It’s still early days, obviously, Rob. We’ve disclosed, but the initial discussions with — between the two teams and with our customers have been very encouraging. We’ve already found a number of pull-through opportunities. We are bringing the teams together faster than we have done historically in terms of integration. So we are combining go-to-market more rapidly than we might have done in the past. And all our customers, in fact, as I may have mentioned on a previous call, part of that acquisition process was getting endorsement from some key customers.
And so they’ve really supported us during the process and they continue to support us as we roll this out. So, yes, I think in many ways, Precision Optical’s acquisition will allow our Broadband business to enter solutions in a way that would have been difficult organically because they didn’t have that kind of architecture in road into that discussion. So that is indeed the big change for us.”
