Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The Russell Midcap Value Index ended Q4 somewhat lower, down -1.75%, after posting robust gains in Q3. The index provided a 13.07% return for the year. Following the US election, mid-cap value stocks experienced a significant rally with the larger US equity market, hitting all-time highs before declining in December. In the quarter, the fund’s Investor Class fund ARTQX returned -3.70%, Advisor Class fund APDQX posted a return of -3.67%, and Institutional Class fund APHQX returned -3.67%, compared to a -1.75% return for the Russell Midcap Value Index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Artisan Mid Cap Value Fund emphasized stocks such as Baxter International Inc. (NYSE:BAX). Baxter International Inc. (NYSE:BAX) is a Medical Instruments & Supplies company that develops and provides healthcare products. The one-month return of Baxter International Inc. (NYSE:BAX) was 12.23%, and its shares lost 16.87% of their value over the last 52 weeks. On March 14, 2025, Baxter International Inc. (NYSE:BAX) stock closed at $34.59 per share with a market capitalization of $17.7 billion.
Artisan Mid Cap Value Fund stated the following regarding Baxter International Inc. (NYSE:BAX) in its Q4 2024 investor letter:
“Our biggest individual detractors in Q4 were Dentsply Sirona, Polaris and Baxter International Inc. (NYSE:BAX). Baxter provides essential products in renal care, medication delivery, advanced surgery, clinical nutrition, pharma and acute therapies. Baxter’s latest quarterly earnings were in line with expectations, but investors were likely looking for better growth in the core business (excluding the kidney care business, which is being sold to Carlyle Group). Additionally, there was a disruption at a manufacturing facility in western North Carolina due to hurricane Helene; however, its impact will likely be limited to the company’s fourth quarter. Given the company’s growth challenges over the past few years, which were duein part to post-COVID-related supply chain issues and higher raw material costs, patience among investors seems to be lacking. Baxter is nearing the end of a multiyear restructuring effort as it has sought to transform itself by selling several non-core operations to raise cash andsimplify the business longer term as it focuses on profitable growth. In 2023, Baxter sold its BioPharma Solutions business at a significant premium, and in 2024, it reached a deal to sell its kidney business. In our view, there is significant pessimism embedded in the stock price as it sells cheaply based on our sum-of-the-parts valuation analysis and for less than 10X our estimate of normalized earnings. Fundamentally, the growth slowdown looks temporary to us. Importantly, all the company’s earnings are turned into free cash flow because it’s not a very capital-intensive business. The company can use that free cash flow to pay down debt or return capital to shareholders via share repurchases and dividends.”
Patients connected to dialysis machines in a hospital ward, highlighting the company’s dialysis and intravenous therapies.
Baxter International Inc. (NYSE:BAX) is in 30th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held Baxter International Inc. (NYSE:BAX) at the end of the fourth quarter compared to 35 in the third quarter. While we acknowledge the potential of Baxter International Inc. (NYSE:BAX) 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 Baxter International Inc. (NYSE:BAX) and shared the list of best stocks with recent dividend cuts. In addition, please check out our hedge fund investor letters Q4 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.