SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The uncertainly prevailing in the market seems to be fueled by constant speculation about macro causes over which the businesses have any control and so much capital concentrated in few enterprises. In the fourth quarter, the strategy returned -7.55% on a gross basis (-7.73% net) compared to a 0.33% return for the Russell 2000 Index and -1.06% for the Russell 2000 Value Index. The strategy returned 5.53% on a gross basis (4.73% net) for the trailing twelve months compared to 11.54% and 11.54% 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 2024.
In its fourth quarter 2024 investor letter, SouthernSun Small Cap Strategy emphasized stocks such as Dorman Products, Inc. (NASDAQ:DORM). Headquartered in Colmar, Pennsylvania, Dorman Products, Inc. (NASDAQ:DORM) is an automotive parts supplier that provides replacement and upgrade parts for vehicles in the motor vehicle aftermarket industry. The one-month return Dorman Products, Inc. (NASDAQ:DORM) was 6.32%, and its shares gained 55.10% of their value over the last 52 weeks. On February 6, 2024, Dorman Products, Inc. (NASDAQ:DORM) stock closed at $129.45 per share, with a market capitalization of $3.95 billion.
SouthernSun Small Cap Strategy stated the following regarding Dorman Products, Inc. (NASDAQ:DORM) in its Q4 2024 investor letter:
“Dorman Products, Inc. (NASDAQ:DORM) was the top contributor in the Small Cap strategy in the fourth quarter. Dorman is a leading manufacturer of automotive aftermarket parts with a unique focus on developing “first to aftermarket” parts to replace prone-to-fail parts that were previously only available from original equipment (OE) manufacturers. During the quarter, Dorman reported solid third quarter results with total sales growing 3%, driven by 5% growth in the Light Duty segment. Gross margin was also strong at 40.5%, driven by easing inflationary pressures, new product mix and operational efficiencies from warehouse automation. During the quarter, we also attended the SEMA show in Las Vegas and saw firsthand some of the innovative aftermarket products that Dorman has introduced to the market. Over the last decade, Dorman has invested heavily to develop differentiated capabilities to break down software codes in OE parts and write proprietary code to match part functionality. This capability is essential to developing complex electronic components for the aftermarket, which is becoming more important as newer vehicles have more electronic components. While strong third quarter results were the key driver of the stock price during the quarter, we believe the business is well positioned to continue outpacing growth of the broader automotive aftermarket over the long term.”
A close-up of a car engine, its components illuminated in the light.
Dorman Products, Inc. (NASDAQ:DORM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held Dorman Products, Inc. (NASDAQ:DORM) at the end of the third quarter which was 16 in the previous quarter. Dorman Products, Inc. (NASDAQ:DORM) reported consolidated net sales of $504 million in the third quarter of 2024, up 3% year over year. While we acknowledge the potential of Dorman Products, Inc. (NASDAQ:DORM) 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.