Madison Investments, an investment advisor, released its “Madison Investors Fund” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund (Class Y) fell by 1.03% compared to a 4.28% return for the S&P 500 index. YTD the fund returned 8.50% compared to a 15.29% return for the index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Madison Investors Fund highlighted stocks like Deere & Company (NYSE:DE) in the Q2 2024 investor letter. Deere & Company (NYSE:DE) manufactures and distributes various equipment. The one-month return of Deere & Company (NYSE:DE) was -0.23%, and its shares lost 13.42% of their value over the last 52 weeks. On July 18, 2024, Deere & Company (NYSE:DE) stock closed at $380.64 per share with a market capitalization of $104.893 billion.
Madison Investors Fund stated the following regarding Deere & Company (NYSE:DE) in its Q2 2024 investor letter:
“We purchased shares in Starbucks Corporation and Deere & Company (NYSE:DE). Deere & Company is the runaway leader in the global farm equipment industry. The company has the strongest network of dealers in the U.S., and incredible brand loyalty among generations of farmers. “Precision ag” is revolutionizing the farming industry through automation and productivity tools, which increase crop yields and lower costs for the farmer. We believe Deere is the standout leader in these technologies through its farsighted commitment to technology investments that it’s maintained over the last couple decades. This dedication through the inevitable ups and downs of the agriculture cycle has enabled Deere to manufacture equipment today that is seamlessly integrated with precision ag technology packages. As a result, we believe Deere’s competitive advantage has widened considerably relative to peers who must deal with a legacy of frequent acquisitions and changes in corporate strategy.
The other benefit accruing to Deere from its technology investments is the ability to create new revenue streams beyond selling equipment. Deere is now monetizing services and analytics under its “John Deere Operations Center” platform where farmers can manage their operations through a single software application. Importantly, revenues generated from farmers subscribing to various precision ag tools are much higher margin and recurring in nature. While this opportunity is still relatively early, Deere believes software revenue can grow to 10% of total by 2030. The current outlook at Deere is clouded by a downturn in the market for ag equipment due to low commodity prices, high interest rates, and a hangover from an unprecedented boom in demand. This uncertainty presented the opportunity to invest in Deere shares at an attractive price.”
A combine harvesting crops, showing the capabilities of the company’s agriculture equipment.
Deere & Company (NYSE:DE) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held Deere & Company (NYSE:DE) at the end of the first quarter which was 54 in the previous quarter. Deere & Company (NYSE:DE) reported net income of $2.37 billion in the fiscal second quarter of 2024, or $8.53 per diluted share. While we acknowledge the potential of Deere & Company (NYSE:DE) 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 Deere & Company (NYSE:DE) and shared the list of largest publicly traded industrial companies in the US. Oakmark Global Fund, another investment management company, also added Deere & Company (NYSE:DE) to its holdings in the second quarter. 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.
