Harding Loevner, an asset management company, released its “Global Small Companies Equity Strategy” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund declined by 4.8% gross of fee in the second quarter compared to a 1.4% decline in the MSCI All Country World Small Cap Index. Global small caps declined in the quarter, while its large-cap counterparts continue to benefit from excitement over artificial intelligence. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Harding Loevner Global Small Companies Equity Strategy highlighted stocks like Simulations Plus, Inc. (NASDAQ:SLP) in the second quarter 2024 investor letter. Simulations Plus, Inc. (NASDAQ:SLP) focuses on development of drug discovery and development software that utilizes artificial intelligence and machine learning based technology for modeling and simulation, and prediction of molecular properties. The one-month return of Simulations Plus, Inc. (NASDAQ:SLP) was -10.10%, and its shares lost 24.73% of their value over the last 52 weeks. On August 15, 2024, Simulations Plus, Inc. (NASDAQ:SLP) stock closed at $32.02 per share with a market capitalization of $626.741 million.
Harding Loevner Global Small Companies Equity Strategy stated the following regarding Simulations Plus, Inc. (NASDAQ:SLP) in its Q2 2024 investor letter:
“One of the bright spots was the health-care equipment and services industry. Simulations Plus, Inc. (NASDAQ:SLP), a US-based pharmaceutical software and services provider, reported improving demand from biotechnology customers that are recovering from a downturn. These companies are attracted to Simulations Plus’s extensive experience in simulating the way drugs interact with the human body.
Enthusiasm over the prospects for Al has introduced a wave of new entrants seeking to apply the technology to industries such as health care-including large, well-funded competitors such as Alphabet’s DeepMind. It’s conceivable that some may try to compete with Simulations Plus in its niche of providing modeling and simulation software to pharmaceutical and biotechnology companies for use throughout the drug-development cycle, a field known as bioinformatics. The company’s flagship software, GastroPlus, was first introduced in 1998 and has become a critical tool for drug researchers to evaluate potential toxicity, an important first step in drug development that traditionally had been performed through animal testing. While the earliest versions of GastroPlus simulated the ways in which a drug is metabolized in the liver (liver damage is the main reason drugs are pulled from the market). Simulations Plus has been able to use enhanced computing power to also help researchers understand how compounds are absorbed in other parts of the body, including the brain, heart, and lungs. In addition to absorption, the latest GastroPlus software can visualize a drug’s pharmacokinetics (how the drug passes through and leaves the body) as well as its pharmacodynamics (how and whether a drug binds to a receptor within a cell, what happens when it does, and how it interacts with other drugs or body chemistry). The company’s decades of experience refining its prediction algorithms-by comparing results from real-world trials with that of its software gives it a very high degree of accuracy. Its unique, proprietary data set would be difficult for new entrants to replicate…” (Click here to read the full text)
A close-up view of a scientist’s hand pressing keys on a laptop as another looks closely at a 3-D model on a large monitor.
Simulations Plus, Inc. (NASDAQ:SLP) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 8 hedge fund portfolios held Simulations Plus, Inc. (NASDAQ:SLP) at the end of the second quarter which was 8 in the previous quarter. Simulations Plus, Inc. (NASDAQ:SLP) delivered solid revenue growth of 14%, diluted earnings per share of $0.15, and adjusted diluted earnings per share of $0.19 in the fiscal third quarter of 2024. While we acknowledge the potential of Simulations Plus, Inc. (NASDAQ:SLP) 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 Simulations Plus, Inc. (NASDAQ:SLP) and shared Conestoga Capital Advisors’ 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.