SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the strategy increased 9.65% on a gross basis (9.44% net) compared to a 14.03% return for the Russell 2000 Index and 15.26% for the Russell 2000 Value Index. The strategy returned 13.93% on a gross basis (13.09% net) for the trailing twelve months compared to 16.93% and 14.65% respectively for the indexes over the same period. In addition, please check the top 5 holdings of the strategy to know its best pick in 2023.
SouthernSun Small Cap Strategy featured stocks such as Dycom Industries, Inc. (NYSE:DY) in the fourth quarter 2023 investor letter. Headquartered in Palm Beach Gardens, Florida, Dycom Industries, Inc. (NYSE:DY) provides contracting services to the telecommunications infrastructure and utility industries. On February 20, 2024, Dycom Industries, Inc. (NYSE:DY) stock closed at $115.06 per share. One-month return of Dycom Industries, Inc. (NYSE:DY) was 1.65%, and its shares gained 41.53% of their value over the last 52 weeks. Dycom Industries, Inc. (NYSE:DY) has a market capitalization of $3.376 billion.
SouthernSun Small Cap Strategy stated the following regarding Dycom Industries, Inc. (NYSE:DY) in its fourth quarter 2023 investor letter:
“Dycom Industries, Inc. (NYSE:DY), a leading provider of engineering and construction services to the telecommunications and utility industries, was one of the top performers in the Small Cap strategy. Revenues were up 9% as broad-based strength across DY’s customers offset the lighter (as expected) spending from AT&T and Frontier. The demand outlook for 2024 looks favorable as management indicated they are seeing signs these two customers are increasing their pace of fiber deployment going into next year and expect government funding from the roughly $40 billion BEAD program to start to be deployed. Profit margins have risen over the last several quarters to Dycom’s historical average, and management is aspiring to expand margins even further as the customer base widens. In our view, Steve Nielsen, CEO, continues to manage the company well and allocate capital effectively while maintaining financial flexibility (ND/ EBITDA of 1.9x). As we have stated in past commentary, with only 43% of the homes in the U.S. passed with fiber, we continue to believe there is a long runway for fiber penetration, and Dycom is well-positioned to engineer, construct and maintain these fiber networks.”
A techie working at a server station in a telecommunications building.
Dycom Industries, Inc. (NYSE:DY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Dycom Industries, Inc. (NYSE:DY) was held by 24 hedge fund portfolios, up from 19 in the previous quarter, according to our database.
We discussed Dycom Industries, Inc. (NYSE:DY) in another article and shared SouthernSun Asset Management’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q4 2023 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.
