Brown Capital Management, an investment management company, released its “The Brown Capital Management Mid Company Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The Mid Company Fund (Institutional shares) returned -7.85 % in the quarter significantly underperforming -3.21% return for the Russell Midcap Growth Index. The strategy focuses on EGCs with strong revenue growth, competitive advantages, and differentiated products that save time, and money or deliver significant value to consumers. In addition, check the fund’s top five holdings to know its best picks in 2024.
Brown Capital Management Mid Company Fund highlighted stocks like Charles River Laboratories International, Inc. (NYSE:CRL) in the second quarter 2024 investor letter. Charles River Laboratories International, Inc. (NYSE:CRL) offers drug discovery, non-clinical development, and safety testing services that operate through Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions (Manufacturing) segments. The one-month return of Charles River Laboratories International, Inc. (NYSE:CRL) was -5.56%, and its shares lost 4.98% of their value over the last 52 weeks. On September 5, 2024, Charles River Laboratories International, Inc. (NYSE:CRL) stock closed at $191.19 per share with a market capitalization of $9.827 billion.
Brown Capital Management Mid Company Fund stated the following regarding Charles River Laboratories International, Inc. (NYSE:CRL) in its Q2 2024 investor letter:
“Charles River Laboratories International, Inc. (NYSE:CRL) is a pre-clinical-trial contract research organization involved in more than 80% of all FDA-approved drugs. The company provides products and services that help pharmaceutical companies, governments and academic institutions accelerate their drug research and development efforts. Charles River is organized in three divisions: Discovery & Safety Assessment, Research Model & Services, and Manufacturing Solutions. Unfortunately, the company is a victim of weakening macro conditions as higher rates have significantly curtailed capital market funding for Charles River’s customers. This means tighter budgets and less spending on early-stage drug discovery research and related services.
In Charles River’s latest earnings release, total revenue shrank year over year for the second consecutive quarter, the first consecutive decline since the Great Financial Crisis in 2008-2009. That’s a sharp contrast to the double-digit growth the company used to enjoy. Furthermore, while management’s guidance implies a recovery later in the year, investors are not as optimistic. Small and medium-sized biotech companies are 40% of Charles River’s client base and are most affected by the weaker funding environment. It is our belief that high interest rates and questionable economic growth have combined to make this capital-raising environment the worst it’s been in at least five years. Despite the difficult period, we feel confident about Charles River’s long-term future. It remains a key partner for outsourced pre-clinical services with leading market share positions in several divisions. We expect global drug innovation to pick up over time. When that happens, Charles River is in a prime position to benefit from the turnaround.”
A laboratory scientist surrounded by drug-discovery equipment and resources.
Charles River Laboratories International, Inc. (NYSE:CRL) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Charles River Laboratories International, Inc. (NYSE:CRL) at the end of the second quarter which was 49 in the previous quarter. In the second quarter, Charles River Laboratories International, Inc. (NYSE:CRL) delivered $1.03 billion in revenue, representing a 3.2% decline from Q2 2023.While we acknowledge the potential of Charles River Laboratories International, Inc. (NYSE:CRL) 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 Charles River Laboratories International, Inc. (NYSE:CRL) and shared Ariel Appreciation Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 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.
