Wasatch Global Investors, an asset management company, released its “Wasatch Micro Cap Value Strategy” second-quarter 2024 investor letter. A copy of the same can be downloaded here. During the second quarter, the strategy fell but significantly outperformed the benchmark Russell Microcap Index which declined -5.27%. The firm did not observe any major changes in its long-term investment position during the quarter. However, it acknowledges that the majority of equities fell as investors’ concerns about the possibility of a recession, higher-for-longer inflation, and interest rates. A small group of stocks that are thought to be doing well because of the artificial intelligence (AI) boom kept going up at the same time. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Wasatch Micro-Cap Value Strategy highlighted stocks like Landsea Homes Corporation (NASDAQ:LSEA), in the second quarter 2024 investor letter. Landsea Homes Corporation (NASDAQ:LSEA) designs, constructs and markets suburban and urban single-family detached and attached homes. The one-month return of Landsea Homes Corporation (NASDAQ:LSEA) was 10.95%, and its shares gained 23.29% of their value over the last 52 weeks. On September 9, 2024, Landsea Homes Corporation (NASDAQ:LSEA) stock closed at $11.75 per share with a market capitalization of $426.236 million.
Wasatch Micro-Cap Value Strategy stated the following regarding Landsea Homes Corporation (NASDAQ:LSEA) in its Q2 2024 investor letter:
“Another significant detractor was Landsea Homes Corporation (NASDAQ:LSEA), which—like Skyline—declined in sympathy with the rate-sensitive group. Landsea designs and builds entry-level homes and broader communities across the United States. Prior to taking a position in the company, we wanted exposure to a traditional homebuilder but had found it difficult to find a suitable micro-cap investment. Because Landsea was 100% owned by Chinese shareholders before our investment and that of others, the company had been burdened by high-cost debt, which had also dragged down the stock price. Now that Chinese ownership has fallen below 50%—which, for lenders, lowers the perceived risks—Landsea has been able to refinance the debt on favorable terms. And the company recently made a strategic acquisition in Texas. We’re optimistic regarding Landsea because we’re impressed with its COO and entire management team, the quality of its homes, the demand in its targeted market segments and geographies and its headroom for growth. Moreover, Landsea’s stock trades at about 0.7 times book value—while a typical valuation for a similar stock is approximately 1.4 times book value.”
Aerial view of a suburban home under construction, displaying its modern architecture.
Landsea Homes Corporation (NASDAQ:LSEA) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Landsea Homes Corporation (NASDAQ:LSEA) at the end of the second quarter which was 15 in the previous quarter. Landsea Homes Corporation (NASDAQ:LSEA) generated $431 million in revenues in the second quarter, representing a 47% increase from Q2 2023. While we acknowledge the potential of Landsea Homes Corporation (NASDAQ:LSEA) 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 Landsea Homes Corporation (NASDAQ:LSEA) and shared Wasatch Micro Cap Value Strategy’s views on the company in the previous 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.
