Ensemble Capital Management, an investment management company, released its second-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the first half of 2024, the strategy increased 8.02% compared to the S&P 500’s 15.29% return. Although the average stock in the S&P 500 has only increased by 5.07% so far this year, the S&P 500 was remarkably up over 15%. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Ensemble Capital Management highlighted stocks like Analog Devices, Inc. (NASDAQ:ADI) in the second quarter 2024 investor letter. Analog Devices, Inc. (NASDAQ:ADI) designs, manufactures, tests, and markets integrated circuits (ICs), software, and subsystems products. The one-month return of Analog Devices, Inc. (NASDAQ:ADI) was 4.13%, and its shares gained 26.02% of their value over the last 52 weeks. On July 18, 2024, Analog Devices, Inc. (NASDAQ:ADI) stock closed at $238.99 per share with a market capitalization of $118.591 billion.
Ensemble Capital Management stated the following regarding Analog Devices, Inc. (NASDAQ:ADI) in its Q2 2024 investor letter:
“We initiated a position in Analog Devices, Inc. (NASDAQ:ADI) in May 2023 and then further increased our position in September 2023 as our conviction grew.
Since May 2023, the stock is up about 25% despite quarterly revenue declining by 33% in the most recently reported quarter. As surprising as it might sound, this discrepancy wasn’t entirely unexpected. Semiconductor stocks often sell off in anticipation of a slowdown or decline in revenue and rise in anticipation of a bottom and future improvement.
At the time we started buying, the analog semiconductor market was at the front end of cyclical weakening coming off of the post-pandemic inventory corrections. Customers and distributors built up inventories to support the surge in sales of products and corresponding shortages they experienced in 2020 and 2021. As supplier production caught up just in time to meet end demand shifting from products to services in mid-2022, the result was a drop off in end-demand and the realization that there was too much inventory of components built…” (Click here to read the full text)
An engineer in a cleanroom testing and tweaking an integrated circuit.
Analog Devices, Inc. (NASDAQ:ADI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 65 hedge fund portfolios held Analog Devices, Inc. (NASDAQ:ADI) at the end of the first quarter which was 62 in the previous quarter. Analog Devices, Inc. (NASDAQ:ADI) reported second-quarter revenue of $2.16 billion, down 34% year-over-year. While we acknowledge the potential of Analog Devices, Inc. (NASDAQ:ADI) 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 Analog Devices, Inc. (NASDAQ:ADI) and shared the list of buzzing AI semiconductor stocks in 2024. 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.
