Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” first quarter 2024 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund returned 3.36% compared to a 2.90% return for the Russell 2000 Value Index. Small value and small quality have outperformed over longer periods, although small caps have significantly underperformed over the past ten years. The firm focuses on the high-quality compounders in its portfolio. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
FPA Queens Road Small Cap Value Fund highlighted stocks like Fabrinet (NYSE:FN) in the first quarter 2024 investor letter. Fabrinet (NYSE:FN) offers optical packaging and precision optical, electro-mechanical, and electronic manufacturing services. Fabrinet’s (NYSE:FN) one-month return was 10.39%, and its shares gained 110.17% of their value over the last 52 weeks. On June 3, 2024, Fabrinet (NYSE:FN) stock closed at $239.19 per share with a market capitalization of $8.382 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding Fabrinet (NYSE:FN) in its first quarter 2024 investor letter:
“Fabrinet (NYSE:FN) is a contract manufacturer of components and modules. The company has a dominant position in hard-to-replicate precision-manufacturing technologies and an enviable track record of execution. The majority of Fabrinet’s sales are to networking equipment manufacturers but it has been successfully diversifying into the data center, industrial, auto, and medical end-markets. FN’s stock jumped after reporting June 2023 earnings – datacenter sales increased 50% sequentially and more than 100% over the previous year, driven by their 800-gigabyte transceivers for Artificial Intelligence applications. The company also announced that Nvidia is a 10%+ customer.
Fabrinet was a top-five holding in the Fund before its June 2023 earnings announcement. Since then, the stock has appreciated considerably and we have trimmed in keeping with our risk management policies. Given the growth in its forward earnings estimates, Fabrinet trades in line with its historical earnings multiples and remains a top five position for us.”
A technician with a laptop looking over a complex optical transport network system.
Fabrinet (NYSE:FN) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held Fabrinet (NYSE:FN) at the end of the first quarter which was 24 in the previous quarter. The third quarter results of FN were above the guidance range. With $731.5 million in revenue, 10% higher than the same period of last year and 3% higher than the prior quarter. While we acknowledge the potential of FN 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 Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Fabrinet (NYSE:FN) and shared FPA Queens Road Small Cap Value Fund’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q1 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.
