Bonhoeffer Capital Management, an asset management company, released its first-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the first quarter of 2024, the fund returned 5.9% net of fees compared to 5.7% returns for MSCI World ex-US, a broad-based index, and 5.3% return for the DFA International Small Cap Value Fund. The fund’s stocks have an average EV/EBITDA of 4.4 and a weighted average earnings/free cash flow yield of 12.3% as of March 31, 2024. During the first quarter, the firm continued to replace slower-growing enterprises with durable, faster-growing firms. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Bonhoeffer Capital Management highlighted stocks like Old Dominion Freight Line (NASDAQ:ODFL) in the first quarter 2024 investor letter. Old Dominion Freight Line (NASDAQ:ODFL) is a less-than-truckload motor carrier. Old Dominion Freight Line’s (NASDAQ:ODFL) one-month return was -5.40%, and its shares gained 8.75% of their value over the last 52 weeks. On June 4, 2024, Old Dominion Freight Line (NASDAQ:ODFL) stock closed at $172.14 per share with a market capitalization of $37.403 billion.
Bonhoeffer Capital Management stated the following regarding Old Dominion Freight Line (NASDAQ:ODFL) in its first quarter 2024 investor letter:
“In remembrance of Charlie Munger, I listened to and read his investment speeches in Poor Charlie’s Almanac. His speech to the University of Southern California business school specifically dealt with the application of worldly wisdom to investment management and business. There were five ideas presented by Munger in that speech which are particularly relevant in the Bonhoeffer portfolio. First, over the long term, it’s hard for a stock to earn more than the underlying business earns. As an illustration of this principle, we examined two firms, Old Dominion Freight Line (NASDAQ:ODFL) and Warner Brothers/Discovery (WBD).
ODFL is an example of a growth stock whose value has been driven by increases in intrinsic value over time. From a commodity trucking business, ODFL has developed a franchise over time through consolidation. Using a DCF model with analyst estimated inputs, Morningstar estimated ODFL’s intrinsic fair values, which appeared overvalued, but stock price grew by 28% per year in-line with intrinsic value which grew by 28%/year which outperformed the index average of 12.7%/year. ODFL’s average RoE was 24.5% and increased thorough the period and ended in the 30%s. The chart below shows both the stock and an estimate of its intrinsic value over time.
These trends of growth and their effects on returns are reflected in the new investments we have invested in and those firms we have sold recently. We have sold most of our telecom and media firms (which have had flat to declining intrinsic values over time). These firms have been replaced by consolidating capital light distribution firms and specialized financial services firms (which have had increased intrinsic value over time) one of which is described below.”
A large fleet of freight trucks travelling down an interstate highway.
Old Dominion Freight Line (NASDAQ:ODFL) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held Old Dominion Freight Line (NASDAQ:ODFL) at the end of the first quarter which was 43 in the previous quarter. The first quarter revenue of Old Dominion Freight Line, Inc. (NASDAQ:ODFL) was $1.5 billion, a 1.2% increase from the prior year. While we acknowledge the potential of Old Dominion Freight Line (NASDAQ:ODFL) 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 Old Dominion Freight Line (NASDAQ:ODFL) and shared the list of best trucking stocks to buy. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
