Andvari Associates, an investment management firm, released its second quarter 2024 investor letter, a copy of which can be downloaded here. Year to date, the portfolio appreciated 7.7% net of fees while the SPDR S&P 500 ETF rose 15.2%. There are two primary causes of Andvari’s trailing returns: (1) the firm does not hold some of the biggest and best-performing companies, such as Nvidia, Apple, Microsoft, Google, Meta, and Amazon; and (2) poor performance of Mesa. Andvari invested in a diverse range of companies in terms of market cap. Andvari’s performance in the first half of the year is in line with what the market typically generates in a complete year. It can feel disappointing, though, if compared with higher performance of the large caps. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.
Andvari Associates highlighted stocks like Pool Corporation (NASDAQ:POOL), in the second quarter 2024 investor letter. Pool Corporation (NASDAQ:POOL) is a swimming pool supplies, equipment, and related leisure products distributor. The one-month return of Pool Corporation (NASDAQ:POOL) was 23.72%, and its shares lost 1.95% of their value over the last 52 weeks. On July 30, 2024, Pool Corporation (NASDAQ:POOL) stock closed at $372.50 per share with a market capitalization of $14.251 billion.
Andvari Associates stated the following regarding Pool Corporation (NASDAQ:POOL) in its Q2 2024 investor letter:
“Pool Corporation (NASDAQ:POOL) is the largest player in a niche market. They are a value-added distributor of all materials and equipment related to the maintenance, remodeling, and construction of swimming pools. Although they have an estimated 40% market share, the market remains highly fragmented, which means they can grow at an above average rate organically and via further acquisitions.
In general, Pool operates in an industry with good tailwinds. Population migration from the north to the south, primarily by retirees, means more new pools and more remodeling of old pools. As the CEO of Pool recently said, the industry joke is that trucks move north with oranges and move south with furniture. Furthermore, once a home has a pool, this ensures a long-term annuity stream of products used to maintain that pool. These are non-discretionary purchases, because if an owner allows a pool to fall into disrepair, this negatively impacts the value of their home. Thus, Pool can easily pass on price increases to their customers.
As a value-added distributor, Pool is a conduit between over 2,200 manufacturers and over 120,000 customers that maintain and build swimming pools. They have taken on the role of trusted partner to manufacturers and end users. They ensure quick, efficient delivery of products while also minimizing the chances of products being out of stock. They have the largest and widest selection of products. They strive for the best customer service. They can advise customers on the best products to meet maintenance or construction needs. They’ve developed software and apps that make owning and maintaining pools easier. For all this, suppliers and customers have rewarded Pool with their long-term business. And the great part about the business is that pools remain a desirable addition to homes. This ensures a slow yet steady growth in their installed base, which drives non-discretionary, recurring sales.”
Aerial view of a large public swimming pool surrounded by lush green lawn and trees.
Pool Corporation (NASDAQ:POOL) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held Pool Corporation (NASDAQ:POOL) at the end of the first quarter which was 42 in the previous quarter. Pool Corporation (NASDAQ:POOL) recorded $1.8 billion in net sales in the second quarter, 5% less than the previous year. While we acknowledge the potential of Pool Corporation (NASDAQ:POOL) 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 Pool Corporation (NASDAQ:POOL) and shared Wedgewood Partners’ 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.
