Turtle Creek Asset Management, an investment management company, released its fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. Turtle Creek had a rather difficult year that culminated in the fourth quarter. Even though the firm ended the year in the black, it was far behind the indices. This was a complete reversal from 2023. In 2024, Turtle Creek’s portfolio business value increased by 14%, compared to a muted 3% increase in 2023. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Turtle Creek Asset Management emphasized stocks such as Bread Financial Holdings, Inc. (NYSE:BFH). Bread Financial Holdings, Inc. (NYSE:BFH) is a financial services company that offers tech-forward payment and lending solutions. The one-month return Bread Financial Holdings, Inc. (NYSE:BFH) was 3.80%, and its shares gained 41.79% of their value over the last 52 weeks. On March 24, 2025, Bread Financial Holdings, Inc. (NYSE:BFH) stock closed at $52.42 per share with a market capitalization of $2.573 billion.
Turtle Creek Asset Management stated the following regarding Bread Financial Holdings, Inc. (NYSE:BFH) in its Q4 2024 investor letter:
“Moving on to specific companies, the largest positive contributor in our flagship fund, both for the quarter and full year, was our investment in Bread Financial Holdings, Inc. (NYSE:BFH). Bread is a regulated financial services company primarily focused on the issuance of private label and co-branded credit cards. It enjoys a strong return on equity (ROE) in excess of 25% as compared to Canadian banks that are in the low to mid teens. And while nearly 60% of Bread’s credit card holders have a prime credit rating, the remaining 40% have credit ratings that are below prime. Despite higher losses from serving these lower credit customers, the higher revenue yield results in higher ROEs. Bread is an excellent example of the power of our long term thinking. It was, in fact, a negative contributor to our performance in 2023 and 2022 before generating a significant positive return for us in 2024. And despite its healthy move this past year, we feel it still holds the potential for significant price appreciation in the near future and it remains one of our largest holdings. There are a number of potential tailwinds for Bread including an expanding traded price multiple, a shrinking share count due to repurchases and the possible dropping of a proposed rule by the Consumer Financial Protection Bureau (“CFPB”) to cap credit card late fees. Under prior Democrat administrations, the CFPB introduced numerous regulations and restrictions around the financial services industry. The proposed cap on late fees would have made it uneconomic to service lower credit score customers. Not only does the late fee importantly serve as a deterrent to skipping payments, it also adds to the total economic return that allows the provision of credit to these higher risk customers. The CFPB under President Trump is widely expected to be more business friendly and less focused on increasing an already hefty regulatory burden.”
A businessperson on a laptop analyzing a chart of credit card loan data.
Bread Financial Holdings, Inc. (NYSE:BFH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Bread Financial Holdings, Inc. (NYSE:BFH) at the end of the fourth quarter which was 32 in the previous quarter. Bread Financial Holdings, Inc.’s (NYSE:BFH) revenue for the fourth quarter reached $0.9 billion, which represents a 9% decline compared to the same period last year. While we acknowledge the potential of Bread Financial Holdings, Inc. (NYSE:BFH) 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 addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.