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 Trex Company, Inc. (NYSE:TREX), in the second quarter 2024 investor letter. Trex Company, Inc. (NYSE:TREX) manufactures and distributes composite decking, railing, and outdoor living products and accessories. The one-month return of Trex Company, Inc. (NYSE:TREX) was -3.47%, and its shares gained 16.68% of their value over the last 52 weeks. On July 12, 2024, Trex Company, Inc. (NYSE:TREX) stock closed at $81.55 per share with a market capitalization of $8.864 billion.
ClearBridge Sustainability Leaders Strategy stated the following regarding Trex Company, Inc. (NYSE:TREX) in its Q2 2024 investor letter:
“Weakness among cyclical sectors and some stock-specific fundamentals were behind the portfolio’s main detractors in the quarter. Industrials holdings Regal Rexnord and Trex Company, Inc. (NYSE:TREX) were down amid slowing macro sentiment. Building suppliers like Trex, which makes composite residential decking, traded down as remodeling activity slowed amid persistent higher interest rates.
Many ClearBridge holdings thus contribute to the circular economy as they either execute on best practices or make improvements in these areas. We have often highlighted Trex as exemplary of the circular economy. Trex is the market share leader of wood-alternative composite decking. Trex’s low-maintenance and high-quality decking products are composed of 95% recycled wood fibers and plastic, making use of waste that would otherwise end up in landfills. Trex has continued to innovate and advance plastic recycling processes. Recently, as the demand for “clean streams” of plastic waste has increased in different parts of the economy, Trex has upgraded technology to be able to accept “dirtier” streams of plastic waste into the manufacturing process. This allowed Trex to begin using additional quantities of waste plastic that would otherwise never be recycled, without compromising product quality standards. Trex products are more durable and have a longer life than traditional wood decking, therefore reducing overall raw material usage and end-product manufacturing. Finally, the quality and durability of the product saves consumers money through less frequent replacements and lower maintenance and upkeep costs.”
A home exterior with a deck and railing crafted with products from the company.
Trex Company, Inc. (NYSE:TREX) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Trex Company, Inc. (NYSE:TREX) at the end of the first quarter which was 32 in the previous quarter. Trex Company, Inc. (NYSE:TREX) reported $374 million in net revenues in the quarter, up 57% year over year. While we acknowledge the potential of Trex Company, Inc. (NYSE:TREX) 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 Trex Company, Inc. (NYSE:TREX) and shared Wasatch U.S. Select Strategy’s views on the company in the previous 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.
