Patient Capital Management, a value investing firm, released its “Patient Capital Opportunity Equity Strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. During the quarter, the strategy returned 5.58% net of fees compared to the S&P 500’s 5.89% return. According to a three-factor performance attribution model, allocation and selection effects contributed positively to the portfolio’s performance while interaction effects contributed negatively. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Patient Capital Management highlighted stocks like Kosmos Energy Ltd. (NYSE:KOS) in the third quarter 2024 investor letter. Kosmos Energy Ltd. (NYSE:KOS) is an exploration and production services company. The one-month return of Kosmos Energy Ltd. (NYSE:KOS) was -1.17%, and its shares lost 42.01% of their value over the last 52 weeks. On October 17, 2024, Kosmos Energy Ltd. (NYSE:KOS) stock closed at $4.21 per share with a market capitalization of $1.986 billion.
Patient Capital Management stated the following regarding Kosmos Energy Ltd. (NYSE:KOS) in its Q3 2024 investor letter:
“Both Kosmos Energy Ltd. (NYSE:KOS) and Seadrill Limited (SDRL) were top detractors in the quarter as energy prices moved lower. We believe both these names are particularly attractive for idiosyncratic reasons beyond a simple bet on energy prices.
Kosmos Energy (KOS) is an exploration and production services company with assets in Africa. The company is nearing the point where their free cash flow generation will inflect meaningfully higher as new production comes online and CAPEX spend returns to a more normalized maintenance level. We see this as a classic case of time arbitrage where the market is myopically focused on the current year’s high level of investment while ignoring the strong free cash flow generation on the other side. At the current commodity curve, the company will generate its market cap in FCF from 2025-2028. With the combination of gas heavy reserves and inflecting cash flow generation, we think Kosmos is significantly undervalued and a potential acquisition target.”
A drilling platform in the middle of the ocean, showing the oil and gas exploration process.
Kosmos Energy Ltd. (NYSE:KOS) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Kosmos Energy Ltd. (NYSE:KOS) at the end of the second quarter which was 26 in the previous quarter. While we acknowledge the potential of Kosmos Energy Ltd. (NYSE:KOS) 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 Kosmos Energy Ltd. (NYSE:KOS) and shared the list of most promising stocks to buy according to Wall Street analysts. 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.