Alluvial Capital Management, an investment advisory firm, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund had a quiet third quarter rising 4.8%. Comparable indexes fared better with the Russell 2000 Index’s 9.8% return and the Russell MicroCap Index’s 9.9% return. Alluvial Fund had a net return of 15.7% year-to-date, which takes it above benchmarks. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Alluvial Capital Management 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.
Alluvial Capital Management stated the following regarding Talen Energy Corporation (NASDAQ:TLN) in its Q3 2024 investor letter:
“Talen Energy Corporation (NASDAQ:TLN) has been an incredible performer for the fund this year. Despite pulling back from all-time highs, shares are still up more than 150% year-to-date. Talen was a classic situation in which an over-leveraged company becomes insolvent thanks to a tough industry backdrop and a string of bad luck, then exits bankruptcy into a much-improved operating environment and with a clean balance sheet. And since exiting, Talen management has put on a master class: selling non-core assets, executing a transformative agreement to supply power to Amazon data centers, and repurchasing huge quantities of deeply under-valued shares. Despite the run-up in the shares, Talen still looks reasonably valued given the rosy outlook for producers of carbon-free baseload power like nuclear. In September, Talen introduced 2026 free cash flow guidance of $10.50-$17.50 per share, putting shares at 13.6x mid-point 2026 free cash flow as I write. I suspect Talen will easily exceed the midpoint of the projection, in part because the figures are based on the current share count of 51 million. Talen recently increased its share repurchase authorization to $1.25 billion by the end of 2026, good for 13% of shares outstanding. Given the need to produce more reliable baseload energy without contributing to harmful emissions, investors and governments around the world are looking to nuclear energy again. But nuclear plants aren’t built in a day, and incumbents will benefit from scarcity value for years to come.”
A vast hydroelectric generation plant with a powerful waterfall cascading downwards.
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.