Firebird Management LLC, an investment management company, released its “Firebird US Value Fund” Q3 2024 investor letter. A copy of the letter can be downloaded here. With a 0.5% decrease in the federal funds rate in the third quarter of 2024, the interest rate-lowering cycle appears to have begun. There is disagreement among market analysts over the final rate setting, however, it is generally agreed that at least one additional interest rate cut will occur in 2024. The portfolio has generated more than $124,000 in operating cash flow for every $1 million in market value during the past 12 months. Over the following five years, the firm anticipates that the operating cash flow of the portfolio will increase at a 9.7% CAGR. The FCF yield of the portfolio is approximately 7.1%, whereas the S&P 500 yield is 2.9%. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.
Firebird US Value Fund highlighted stocks like Sleep Number Corporation (NASDAQ:SNBR) in the Q3 2024 investor letter. Sleep Number Corporation (NASDAQ:SNBR) provides sleep solutions and services. The one-month return of Sleep Number Corporation (NASDAQ:SNBR) was -23.48%, and its shares lost 21.83% of their value over the last 52 weeks. On November 1, 2024, Sleep Number Corporation (NASDAQ:SNBR) stock closed at $12.71 per share with a market capitalization of $284.335 million.
Firebird US Value Fund stated the following regarding Sleep Number Corporation (NASDAQ:SNBR) in its Q3 2024 investor letter:
“Our decision to sell Sleep Number Corporation (NASDAQ:SNBR) was primarily due to a significant mistake in capital allocation by the company, which became evident with a substantial decline in demand. Over the past two years, the company has been grappling with a challenging environment, marked by a significant drop in the number of housing transactions, a key driver for new mattress demand.
While the company has done reasonably well controlling its costs, the current level of demand leaves it barely breaking even and in danger of defaulting on the debt taken up to buy back shares at much higher prices. While buybacks seemed to make sense at the time, given high profitability, between 2018 and 2022 the company spent over $1.1 billion on share buybacks while it generated only $700 million of free cash flow…” (Click here to read the full text)
A close-up of a window display featuring Sleep Solutions bedding products.
Sleep Number Corporation (NASDAQ:SNBR) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held Sleep Number Corporation (NASDAQ:SNBR) at the end of the second quarter which was 21 in the previous quarter. In the third quarter, Sleep Number Corporation (NASDAQ: SNBR) reported net sales of $427 million, a decrease of 10% compared to last year, falling five points short of our expectations. While we acknowledge the potential of Sleep Number Corporation (NASDAQ:SNBR) 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 addition, please check out our hedge fund investor letters Q3 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.