Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund returned -0.11% (gross) and -0.31% (net) compared to 8.33% for the Russell 1000 Growth Index and 4.28% for the S&P 500 Index. Generative AI (GenAI) remains the dominant market narrative in the second quarter. The portfolio does not own NVIDIA or other Semiconductor companies that are presently benefitting from the demand for AI hardware. However, with the portfolio’s extensive investment in software and IT services, the firm anticipates that GenAI’s long-term economic gains will go to these industries. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Polen Focus Growth Strategy highlighted stocks like MSCI Inc. (NYSE:MSCI) in its Q2 2024 investor letter. MSCI Inc. (NYSE:MSCI), provides critical decision support tools and solutions for the investment community. The one-month return of MSCI Inc. (NYSE:MSCI) was 1.38%, and its shares lost 1.36% of their value over the last 52 weeks. On July 19, 2024, MSCI Inc. (NYSE:MSCI) stock closed at $495.89 per share with a market capitalization of $39.286 billion.
Polen Focus Growth Strategy stated the following regarding MSCI Inc. (NYSE:MSCI) in its Q2 2024 investor letter:
“We re-initiated a position in MSCI Inc. (NYSE:MSCI) after owning it from 2019 to 2022. When we sold the position in April 2022, we noted that the company was an excellent compounder and would likely continue to compound earnings at a high-teens rate over the next five years. We also noted that we’d be happy to own MSCI again at a good price.
More than two years later, we’re buying back a position at a lower price despite 30% higher earnings. The stock sold off recently after MSCI reported a decrease in net new subscription sales during the first quarter. New subscription sales were up modestly compared to the prior year, but there was a bolus of cancellations due to “business events,” most notably UBS acquiring Credit Suisse and adjusting their subscriptions. While net new subscription sales might be soft near-term, retention rates remain high for this highly recurring and profitable business. This short-term softness does not change our view on the business’s competitive advantages or long-term growth profile.
MSCI has compelling competitive advantages, leadership, and secular growth trends, including the continued move of assets toward passive, international, factor-based, and ESG-related investments. We also like the company’s longer-term strategy of being the index provider for private market investments.”
A successful portfolio manager working on a laptop in a large office with a city view, representing the success of the company in the financial sector.
MSCI Inc. (NYSE:MSCI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 53 hedge fund portfolios held MSCI Inc. (NYSE:MSCI) at the end of the first quarter which was 42 in the previous quarter. In the first quarter 2024, MSCI Inc. (NYSE:MSCI) reported organic revenue growth of 10%, adjusted earnings per share growth of 12%, and free cash flow growth of 14%. While we acknowledge the potential of MSCI Inc. (NYSE:MSCI) 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 MSCI Inc. (NYSE:MSCI) and shared the list of stocks CEOs are buying. 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.
