SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” second quarter 2024 investor letter. A copy of the same can be downloaded here. In the second quarter, the strategy lost -3.55% on a gross basis (-3.69% net) compared to a -3.28% return for the Russell 2000 Index and -3.64% for the Russell 2000 Value Index. The strategy returned 4.61% on a gross basis (3.88% net) for the trailing twelve months compared to 10.06% and 10.90% 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.
SouthernSun Small Cap Strategy highlighted stocks like Dycom Industries, Inc. (NYSE:DY) in the second quarter 2024 investor letter. Headquartered in Palm Beach Gardens, Florida, Dycom Industries, Inc. (NYSE:DY) provides contracting services to the telecommunications infrastructure and utility industries. The one-month return of Dycom Industries, Inc. (NYSE:DY) was 3.37%, and its shares gained 83.92% of their value over the last 52 weeks. On July 31, 2024, Dycom Industries, Inc. (NYSE:DY) stock closed at $183.51 per share with a market capitalization of $5.218 billion.
SouthernSun Small Cap Strategy stated the following regarding Dycom Industries, Inc. (NYSE:DY) in its Q2 2024 investor letter:
“Dycom Industries, Inc. (NYSE:DY), a leading provider of engineering and construction services to the telecommunications and utility industries, was a top contributor in the Small Cap strategy in the second quarter as the company returned to organic growth and delivered continued margin expansion. The demand outlook for fiber construction in urban areas remains strong as carriers continue to generate good returns on their fiber investments. Public funding for fiber through the ARPA, RDOF, and BEAD programs is an additional source of significant demand. Notably, the $40 billion BEAD program is the largest federal broadband program ever in the U.S., and deployment is expected to start in 2025. According to management, the M&A environment has improved, and two small acquisitions were completed in the first half of 2024. With Net Debt/EBITDA at 1.6x, we believe DY has adequate financial flexibility to take advantage of additional opportunities. Steve Nielsen, CEO, will retire at the end of November, after 25 years leading the company. His successor, Dan Peyovich, was hired as COO in 2021 with succession in mind and has over 20 years of experience in engineering and construction. We plan to meet with Dan over the coming months to discuss his vision for the company. Overall, we believe DY is executing well and remains well positioned to capitalize on the strong tailwinds in the industry while maintaining a shareholder friendly capital allocation strategy.”
A utility employee connecting wires at a power station in order to distribute electricity to customers.
Dycom Industries, Inc. (NYSE:DY) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held Dycom Industries, Inc. (NYSE:DY) at the end of the first quarter which was 24 in the previous quarter. Revenue of Dycom Industries, Inc. (NYSE:DY) in the first quarter rose to $1.142 billion in the first quarter, a 9.3% increase year over year, with organic revenue up 2.5%. While we acknowledge the potential of Dycom Industries, Inc. (NYSE:DY) 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 Dycom Industries, Inc. (NYSE:DY) and shared Aristotle Small Cap Equity Strategy’s views on the company. Dycom Industries, Inc. (NYSE:DY) was the top contributor in the SouthernSun Small Cap Strategy in Q1 2024. 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.
