Fiduciary Management Inc. (FMI), an independent money management firm, released its “FMI Small Cap Equity Strategy” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. The investment philosophy of the firm is to invest in durable business franchises that are selling at a discount to their intrinsic value. In the fourth quarter, the strategy returned -0.63% (gross) and -0.81% (net) compared to 0.33% return for the Russell 2000 Index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
FMI Small Cap Equity Strategy highlighted stocks like Hayward Holdings, Inc. (NYSE:HAYW) in the fourth quarter 2024 investor letter. Hayward Holdings, Inc. (NYSE:HAYW) manufactures and markets a portfolio of pool equipment and associated automation systems. The one-month return of Hayward Holdings, Inc. (NYSE:HAYW) was -11.37%, and its shares gained 14.07% of their value over the last 52 weeks. On January 10, 2025, Hayward Holdings, Inc. (NYSE:HAYW) stock closed at $14.35 per share with a market capitalization of $3.09 billion.
FMI Small Cap Equity Strategy stated the following regarding Hayward Holdings, Inc. (NYSE:HAYW) in its Q4 2024 investor letter:
“Hayward Holdings, Inc. (NYSE:HAYW) is a pool equipment manufacturer that primarily serves the residential pool market. Their products include pumps, automation and sanitization equipment, pool heaters, filters, lighting and water features, and cleaners. The company estimates that 50% of its business comes from repair/replacement sales which provides a stable revenue base. Pool service professionals recommend and install products for end customers. They care about a host of factors more than price when selecting equipment, as they’re not ultimately paying for the product, which creates barriers to entry and strong pricing power for incumbent players. The industry has historically raised price to at the very least offset cost inflation, and in many years has priced above cost inflation. We believe a good time to buy the business is when discretionary spending is depressed, as is the case today. New pool construction is at its lowest point since 2014 and remodel activity is subdued. The shares appear to be a good relative value in an expensive market. We initiated a 1.5% position in December 2024.”
A technician in safety gear inspecting a pool automated system.
Hayward Holdings, Inc. (NYSE:HAYW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Hayward Holdings, Inc. (NYSE:HAYW) at the end of the third quarter which was 22 in the previous quarter. In the third quarter, Hayward Holdings, Inc.’s (NYSE:HAYW) net sales increased 3% year-over-year to $228 million. While we acknowledge the potential of Hayward Holdings, Inc. (NYSE:HAYW) 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 Hayward Holdings, Inc. (NYSE:HAYW) and shared Heartland Value Plus Fund’s views on the company. In addition, please check out our hedge fund investor letters Q4 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.