Investment management company Vulcan Value Partners recently released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. Although the firm is pleased with the results, the quarterly results were mixed during the quarter. The firm capitalized on stock price volatility by allocating capital to companies with better price-to-value ratios. In the quarter, the fund’s Large Cap Composite returned 8.2% net of fees and expenses, the Small Cap Composite returned 9.1% net, the Focus Composite returned 5.6% net, the Focus Plus composite returned 5.9% and the All-Cap Composite returned 8.1% net. For more information on the fund’s best picks in 2024, please check its top five holdings.
Vulcan Value Partners highlighted stocks like Everest Group, Ltd. (NYSE:EG) in the third quarter 2024 investor letter. Everest Group, Ltd. (NYSE:EG) offers insurance and reinsurance products. The one-month return of Everest Group, Ltd. (NYSE:EG) was -0.37%, and its shares lost 3.93% of their value over the last 52 weeks. On October 15, 2024, Everest Group, Ltd. (NYSE:EG) stock closed at $386.07 per share with a market capitalization of $16.707 billion.
Vulcan Value Partners stated the following regarding Everest Group, Ltd. (NYSE:EG) in its Q3 2024 investor letter:
“Everest Group, Ltd. (NYSE:EG) is a global reinsurance and insurance business known for its disciplined cost structure and high-quality underwriting. Insurance is an inherently cyclical business. “Hard markets” occur when premium prices are high relative to insured risks. Hard markets inevitably attract more capital to the industry, causing premium prices to fall relative to insured risks, which results in a “soft market”. Soft markets lead undisciplined underwriters to post underwriting losses, removing capital from the industry, and the cycle repeats. In evaluating insurance companies, we believe that growth in tangible book value per share more closely approximates growth in intrinsic value per share than does growth in earnings per share. Compounding book value per share requires underwriting discipline. Moreover, given the cyclical nature of the business, a disciplined underwriter will have more volatile earnings in the short run than an undisciplined underwriter. Everest Group underwrites aggressively in hard markets and builds underwriting capacity during soft markets. During the most recent hard market, the company has significantly grown book value per share. We applaud Everest Group’s emphasis on growing intrinsic value per share over the long term instead of managing short term earnings per share. We first purchased Everest Group, then called Everest Re, in Small Cap where we held it for over thirteen years. It grew into a large cap, and we owned it in Large Cap for over ten years. We are pleased to be able to invest in Everest Group again with a margin of safety to our estimate of intrinsic value.”
Everest Group, Ltd. (NYSE:EG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held Everest Group, Ltd. (NYSE:EG) at the end of the second quarter which was 40 in the previous quarter. In the second quarter, Everest Group, Ltd.’s (NYSE:EG) performance generated a 20% annualized total shareholder return and $730 million in net operating income an increase of more than $100 million year-over-year. While we acknowledge the potential of Everest Group, Ltd. (NYSE:EG) 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 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.
