Apis Capital Advisors, an investment management company, released its “Apis Global Discovery Fund” third-quarter investor letter. A copy of the letter can be downloaded here. The fund rose 3.7% net in Q3 2024 and is up 11.6% YTD. The MSCI ACWI SMID-Cap benchmark index was up 9.4% and up 12.5%, respectively, over the same period. Overweight positioning in Asia – particularly Korea, Japan, and Taiwan – drove the portfolio to underperform in the quarter relative to benchmarks. A copy of the letter can be downloaded here. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.
Apis Global Discovery Fund highlighted stocks like Talen Energy Corporation (NASDAQ:TLN), in the third quarter 2024 investor letter. Talen Energy Corporation (NASDAQ:TLN) is an independent power producer and infrastructure company. The one-month return of Talen Energy Corporation (NASDAQ:TLN) was 21.32%, and its shares gained 296.91% of their value over the last 52 weeks. On November 21, 2024, Talen Energy Corporation (NASDAQ:TLN) stock closed at $219.89 per share with a market capitalization of $11.183 billion.
Apis Global Discovery Fund stated the following regarding Talen Energy Corporation (NASDAQ:TLN) in its Q3 2024 investor letter:
“The top performer in the quarter was Talen Energy Corporation (NASDAQ:TLN), which we feature below, along with Hallador Energy. Both companies are cheap and well-positioned to benefit from selling power to AI data centers. Talen is an independent power producer (IPP) that serves the Pennsylvania-Jersey-Maryland (PJM) market. It owns 10.7 GW of generation capacity, with the Susquehanna nuclear plant accounting for 2.2 GW, while the remaining assets are various natural gas “peaking” plants that operate at 25-65% utilization. The company went public in 2015 as a combination of Pennsylvania Power & Light’s unregulated energy business and the power generation portfolio of a PE shop, Riverstone Holdings. Riverstone took the business private in 2016. Overleveraged following the take-private and poor hedges eventually forced Talen to file for bankruptcy in 2022, and it reemerged as a public company in 2023 on the OTC market with a new board, management, and cleaned-up balance sheet. In July, shares were uplisted to the Nasdaq and will likely be added to several indexes over the coming months.
The Susquehanna plant is Talen’s prize asset. It is the 6th largest nuclear plant in the country, and while it accounts for only 20% of Talen’s overall capacity, it is responsible for nearly 50% of Talen’s annual power generation. The IRA legislation passed in 2022 made nuclear plants particularly attractive assets by introducing a production tax credit (PTC) mechanism that effectively sets an approximate $40/MWh floor on power prices generated from nuclear. Compare this to Susquehanna’s operating costs of about $23/MWh, and you get a floor of around $300mm in operating cash flow to Talen from Susquehanna alone…” (Click here to read the full text)
A panoramic view of a concentrated solar power plant swathed in bright sunshine.
Talen Energy Corporation (NASDAQ:TLN) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held Talen Energy Corporation (NASDAQ:TLN) at the end of the third quarter which was 0 in the previous quarter. In the third quarter, Talen Energy Corporation (NASDAQ:TLN) generated adjusted EBITDA of $230 million and adjusted free cash flow of $97 million. While we acknowledge the potential of Talen Energy Corporation (NASDAQ:TLN) 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 Talen Energy Corporation (NASDAQ:TLN) and shared Alluvial Capital Management’s views on the company in the previous quarter. 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.