SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The uncertainly prevailing in the market seems to be fueled by constant speculation about macro causes over which the businesses have any control and so much capital concentrated in few enterprises. In the fourth quarter, the strategy returned -7.55% on a gross basis (-7.73% net) compared to a 0.33% return for the Russell 2000 Index and -1.06% for the Russell 2000 Value Index. The strategy returned 5.53% on a gross basis (4.73% net) for the trailing twelve months compared to 11.54% and 11.54% respectively for the indexes over the same period. In addition, please check the top 5 holdings of the strategy to know its best pick in 2024.
In its fourth quarter 2024 investor letter, SouthernSun Small Cap Strategy emphasized stocks such as Advanced Energy Industries, Inc. (NASDAQ:AEIS). Based in Denver, Colorado, Advanced Energy Industries, Inc. (NASDAQ:AEIS) provides precision power conversion, measurement, and control solutions. The one-month return of Advanced Energy Industries, Inc. (NASDAQ:AEIS) was -4.44%, and its shares gained 7.95% of their value over the last 52 weeks. On February 6, 2024, Advanced Energy Industries, Inc. (NASDAQ:AEIS) stock closed at $113.10 per share, with a market capitalization of $4.26 billion.
SouthernSun Small Cap Strategy stated the following regarding Advanced Energy Industries, Inc. (NASDAQ:AEIS) in its Q4 2024 investor letter:
“We initiated a position in Advanced Energy Industries, Inc. (NASDAQ:AEIS) during the quarter. AEIS designs and manufactures highly engineered power conversion, measurement and control solutions. The company’s power conversion products convert raw electricity from the utility grid into a precise, useable form of power for a given application. AEIS works in close collaboration with equipment manufacturers to design highly customized solutions, and approximately 70% of revenue comes from sole-sourced designs.
We began our research on this business, and this space more broadly, in 2021 and have learned a lot about the eco[1]systems that AEIS supports. You may recall that we were owners of CCMP in the post-COVID period before that business was acquired in 2022 by ENTG. Years before that, we were owners of Newport Corp, which was acquired by MKSI in 2016. Our time in and around the semi-conductor market, as well as decades of investing in industrial and medical markets, gave us a keen interest in learning more about AEIS, as we had come across the name but hadn’t done significant research. We have spent the past 2-3 years filling our files, as we have studied this business and it’s value chain more intensively…” (Click here to read the full text)
A technician operating a power control module at a laboratory station.
Advanced Energy Industries, Inc. (NASDAQ:AEIS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held Advanced Energy Industries, Inc. (NASDAQ:AEIS) at the end of the third quarter which was 16 in the previous quarter. Advanced Energy Industries, Inc. (NASDAQ:AEIS) generated revenue of $374 million in the third quarter, which is slightly above the midpoint of guidance range. While we acknowledge the potential of Advanced Energy Industries, Inc. (NASDAQ:AEIS) 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 Advanced Energy Industries, Inc. (NASDAQ:AEIS) and shared Baron Discovery Fund’s views on the company. 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.