The London Company, an investment management company, released “The London Company Small Cap Strategy” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the quarter, the fund fell 5.8% (5.9%, net) compared to a 3.3% decrease in the Russell 2000 Index. The positive impact of sector allocation was mitigated by stock selection in the second quarter. For more information on the fund’s top picks in 2024, please check its top five holdings.
The London Company Small Cap Strategy highlighted stocks like Gates Industrial Corporation plc (NYSE:GTES) in the Q2 2024 investor letter. Gates Industrial Corporation plc (NYSE:GTES) manufactures and distributes engineered power transmission and fluid power solutions. The one-month return of Gates Industrial Corporation plc (NYSE:GTES) was 4.43%, and its shares gained 41.54% of their value over the last 52 weeks. On August 9, 2024, Gates Industrial Corporation plc (NYSE:GTES) stock closed at $16.73 per share with a market capitalization of $4.377 billion.
The London Company Small Cap Strategy stated the following regarding Gates Industrial Corporation plc (NYSE:GTES) in its Q2 2024 investor letter:
“Initiated: Gates Industrial Corporation plc (NYSE:GTES) – GTES is a leading global manufacturer of power transmission belts, fluid power products, and other critical components used in a variety of heavy industrial and automotive applications. Its industry leading position is supported by its quality reputation, established client relationships, product breadth, and history of successful innovation. Nearly 2/3 of revenues are generated from replacement demand, providing greater earnings stability through the cycle and a good source of downside protection. GTES’s favorable margin profile and limited capital needs enable strong free cash flow generation and high returns on capital. End market weakness have weighed on sentiment, but these headwinds are abating. At roughly 9x EV/EBITDA, we feel the risks are largely priced in and downside is limited.”
A factory worker in a safety vest tightening a V-belt on a power transmission assembly.
Gates Industrial Corporation plc (NYSE:GTES) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held Gates Industrial Corporation plc (NYSE:GTES) at the end of the first quarter which was 38 in the previous quarter. While we acknowledge the potential of Gates Industrial Corporation plc (NYSE:GTES) 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 Gates Industrial Corporation plc (NYSE:GTES) and shared Fiduciary Management’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.
