Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, the fund returned 2.38% compared to a -1.06 % return for the Russell 2000 Value Index. For the full year, the fund returned 10.76% compared to an 8.05% return for the index. The firm’s focus is on long-term performance, aiming to outperform the Russell 2000 Value Index with less risk throughout the entire market cycle. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
In its fourth quarter 2024 investor letter, FPA Queens Road Small Cap Value Fund emphasized stocks such as MSC Industrial Direct Co., Inc. (NYSE:MSM). MSC Industrial Direct Co., Inc. (NYSE:MSM) is a US based industrial distributor that offers metalworking and maintenance, repair, and operations (MRO) products and services. The one-month return of MSC Industrial Direct Co., Inc. (NYSE:MSM) was -3.46%, and its shares lost 21.21% of their value over the last 52 weeks. On March 5, 2025, MSC Industrial Direct Co., Inc. (NYSE:MSM) stock closed at $77.78 per share with a market capitalization of $4.345 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding MSC Industrial Direct Co., Inc. (NYSE:MSM) in its Q4 2024 investor letter:
“MSC Industrial Direct Co., Inc. (NYSE:MSM) is an industrial distributor with a specialty in metalworking products. We like distributors – they tend to be cash generative, sticky, and they can protect cash flow in recessions by selling down inventory. MSC has been a steady earner over its lifetime and pays most of its earnings out as dividends. The company also scores well on our dashboard that measures earnings consistency and return on invested capital (ROIC). The company has suffered from lowered expectations for an American manufacturing renaissance and the shares fell 10% on June 14 after the company reported weak results and took down guidance.”
A machine shop filled with high-precision tools and components representing the quality of the company’s metalworking products.
MSC Industrial Direct Co., Inc. (NYSE:MSM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held MSC Industrial Direct Co., Inc. (NYSE:MSM) at the end of the fourth quarter compared to 26 in the third quarter. MSC Industrial Direct Co., Inc.’s (NYSE:MSM) fiscal first-quarter sales reached $928 million, marking a 2.7% decline compared to the previous year. While we acknowledge the potential of MSC Industrial Direct Co., Inc. (NYSE:MSM) 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 MSC Industrial Direct Co., Inc. (NYSE:MSM) and shared the list of best industrial distribution stocks to buy according to hedge funds. 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.