Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” third quarter 2023 investor letter. A copy of the same can be downloaded here. In the third quarter, its Investor Class fund ARTQX returned -2.94%, Advisor Class fund APDQX posted a return of -2.95%, and Institutional Class fund APHQX returned -2.89 %, compared to a -4.46% return for the Russell Midcap Value Index. The portfolio had a negative return in Q3 but performed better than the Russell Midcap Value Index due to favorable security selection. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Artisan Mid Cap Value Fund highlighted stocks like Waters Corporation (NYSE:WAT) in the Q3 2023 investor letter. Headquartered in Milford, Massachusetts, Waters Corporation (NYSE:WAT) is a specialty measurement company that provides analytical workflow solutions. On October 13, 2023, Waters Corporation (NYSE:WAT) stock closed at $252.61 per share. One-month return of Waters Corporation (NYSE:WAT) was -8.41%, and its shares lost 7.19% of their value over the last 52 weeks. Waters Corporation (NYSE:WAT) has a market capitalization of $14.93 billion.
Artisan Mid Cap Value Fund made the following comment about Waters Corporation (NYSE:WAT) in its Q3 2023 investor letter:
“We made one new purchase in Q3: Waters Corporation (NYSE:WAT) Classified in the health care sector, Waters is a specialty measurement company that offers analytical workflow solutions for quality assurance/quality control (QA/QC) to pharma, industrial, academic and government customers. As always, for a new name to enter the portfolio, we require it to meet each of our three margin of safety criteria: attractive business economics, a sound financial condition and an attractive valuation. With regard to Waters, its business economics benefit from high growth visibility given the recurring nature of its portfolio. Moreover, it has industry-leading margins that have been very stable over time, it converts most of its earnings to cash, and its free cash flow margin is ~20%. Waters has a high recurring revenue stream (about 50% of revenues), which includes consumables, services and software, and this also contributes to a stronger financial condition. The balance is instruments, which are driven by replacement, moderate market growth and innovation. Instruments sales are quite sticky because methods for testing are part of regulatory filings, which are difficult and cumbersome to change. The company has a conservative balance sheet. Net leverage (net debt/EBITDA) has risen to 2.3X post its acquisition of Wyatt Technology, but we believe it should de-lever back to its long-run average of 1.0X in a few quarters. We were able to purchase it at an attractive price because the stock de-rated due to concerns about pharma capital spending. Waters is trading close to a trough multiple on EV/EBIT and at a discount to peers.”
Waters Corporation (NYSE:WAT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held Waters Corporation (NYSE:WAT) at the end of the second quarter, which was 44 in the previous quarter.
We discussed Waters Corporation (NYSE:WAT) in another article and shared the list of best scientific instruments stocks to buy. In addition, please check out our hedge fund investor letters Q3 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.
