Rewey Asset Management, an investment management company, released its “RAM Smid Composite” third quarter investor letter. A copy of the letter can be downloaded here. The fund rose 9.83% in 3Q24 and 18.53% year-to-date, outperforming the benchmark, the Russell 2500 Value index, which gained 9.63% in 3Q24 and up 11.27% YTD. The firm constructed its portfolio based on a three-pronged investment philosophy—financial strength, the ability to grow, and discounted valuations. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Rewey Asset Management highlighted stocks like Kyndryl Holdings, Inc. (NYSE:KD) in the third quarter 2024 investor letter. Kyndryl Holdings, Inc. (NYSE:KD) is a technology services company and IT infrastructure services provider. The one-month return of Kyndryl Holdings, Inc. (NYSE:KD) was 25.84%, and its shares gained 81.36% of their value over the last 52 weeks. On December 13, 2024, Kyndryl Holdings, Inc. (NYSE:KD) stock closed at $35.31 per share with a market capitalization of $8.2 billion.
Rewey Asset Management stated the following regarding Kyndryl Holdings, Inc. (NYSE:KD) in its Q3 2024 investor letter:
“We continue to see significant neglect and undervaluation in shares of Kyndryl Holdings, Inc. (NYSE:KD), a position that shows 94% upside to our AFV price target of $44.60 per share.
Kyndryl is a $5.5 billion market cap designer, builder, manager, and modernizer of mission critical, i.e., backbone, information technology infrastructure systems, including public, private, and multi-cloud environments. KD was spun out of IBM in November of 2021. Since the spin, KD has been aggressively repositioning its business by shedding unprofitable legacy IBM driven contracts, partnering with leading technology companies including MSFT, GOOGL, AMZN, SAP, VMW, ORCL, etc., signing new contracts at significantly higher margins, and optimizing its cost structure. Today’s KD bears little resemblance to its pre-spin form where IBM neglected profits in the unit to secure large hardware sales in separate divisions.
KD has maintained a very strong financial profile through its transition and has ample financial flexibility as it moves forward to a future that is likely to show strong revenue, earnings and free cash flow growth. KD’s net debt is very reasonable at $1.97 billion ($1.26 bil. cash, $3.24 bil. debt), approximately 79% of FY2025 expected EBITDA. KD’s financial strength is further amplified by its investment grade rating at all three agencies, and as it has not drawn down any of its $3.15 billion revolver…” (Click here to read the full text)
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Kyndryl Holdings, Inc. (NYSE:KD) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held Kyndryl Holdings, Inc. (NYSE:KD) at the end of the third quarter which was 36 in the previous quarter. Kyndryl Holdings, Inc.’s (NYSE:KD) second fiscal quarter 2025 revenue totaled $3.8 billion, a 7% year-over-year decline in constant currency. While we acknowledge the potential of Kyndryl Holdings, Inc. (NYSE:KD) 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 Kyndryl Holdings, Inc. (NYSE:KD) and shared the list of top stocks to buy from David Einhorn’s stock portfolio. 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.
