TimesSquare Capital Management, an equity investment management company, released its “U.S. Small Cap Growth Strategy” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the quarter the fund returned 6.50% (gross) and 6.24% (net), compared to an 8.41% return for the Russell 2000 Growth Index. Global markets performed fairly in the third quarter, with the majority of credit and stock markets reporting returns in the mid- to high single-digit range. Energy costs decreased and economic activity indicators remained steady, but recent increases in Middle East tensions started to reverse that. Smaller or value-oriented stocks in developed economies yielded higher returns in the equity space, whereas emerging markets saw the opposite trend. Beta was one of the most powerful variables in global equities this quarter, following a poor first half of 2024. In addition, please check the fund’s top five holdings to know its best picks in 2024.
TimesSquare Capital U.S. Small Cap Growth Strategy highlighted stocks like Topgolf Callaway Brands Corp. (NYSE:MODG) in the third quarter 2023 investor letter. Headquartered in Carlsbad, California, Topgolf Callaway Brands Corp. (NYSE:MODG) manufactures and distributes golf equipment and accessories. The one-month return of Topgolf Callaway Brands Corp. (NYSE:MODG) was -16.30%, and its shares lost 37.28% of their value over the last 52 weeks. On December 5, 2024, Topgolf Callaway Brands Corp. (NYSE:MODG) stock closed at $8.06 per share with a market capitalization of $1.482 billion.
TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding Topgolf Callaway Brands Corp. (NYSE:MODG) in its Q3 2024 investor letter:
“Our preferences in the Consumer-oriented sectors lean toward value-oriented or specialty retailers, franchise models, premium brands, or support services for other consumer companies. Also detracting from results was Topgolf Callaway Brands Corp. (NYSE:MODG), which manufactures golf equipment and accessories, as well as operates entertainment venues. Although recent channel checks indicated that TopGolf activity trends were improving, that softened later in the quarter. Overall revenues and earnings were less than anticipated, which led management to lower its guidance for the rest of the year. The company’s Callaway equipment and apparel business was more stable, though management also discussed a strategic review of the entertainment business. Subsequently, the company announced plans to spin off TopGolf in 2025. While we agreed with the rationale, the timing was at a point of weakness, and we exited the position that was down -31% during the quarter.”
A group of happy golfers basking in the warm sun on a golf course.
Topgolf Callaway Brands Corp. (NYSE:MODG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Topgolf Callaway Brands Corp. (NYSE:MODG) at the end of the third quarter which was 17 in the previous quarter. Topgolf Callaway Brands Corp.’s (NYSE:MODG) cash provided by operating activities increased 49% to $111 million in the first nine months. While we acknowledge the potential of Topgolf Callaway Brands Corp. (NYSE:MODG) 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 Topgolf Callaway Brands Corp. (NYSE:MODG) and shared the list of best golf stocks to invest in according to hedge funds. 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.