Miller Value Partners, an investment management company, released its “Deep Value Select Strategy” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the third quarter, Strategy returned 4.6% (net of fees) behind the S&P 1500 Value Index’s 9.1% return and the S&P 600 Value Index’s +11.3% returns. The strategy returned 20.13% (net of fees) year to date, well ahead of +14.8% and +6.1% returns for the indexes. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Miller Deep Value Select Strategy highlighted stocks like United Natural Foods, Inc. (NYSE:UNFI) in the third quarter 2024 investor letter. United Natural Foods, Inc. (NYSE:UNFI) distributes natural, organic, specialty, produce, and conventional grocery and non-food products. The one-month return of United Natural Foods, Inc. (NYSE:UNFI) was 20.47%, and its shares gained 64.14% of their value over the last 52 weeks. On November 25, 2024, United Natural Foods, Inc. (NYSE:UNFI) stock closed at $24.95 per share with a market capitalization of $1.495 billion.
Miller Deep Value Select Strategy stated the following regarding United Natural Foods, Inc. (NYSE:UNFI) in its Q3 2024 investor letter:
“During the quarter, our two largest positive contributors were Gannett (GCI), whose market share price up 20% and United Natural Foods, Inc. (NYSE:UNFI), with a market share price up 31%. United Natural Foods’ share price continues to recover from recent 20-year lows however is still down 60% from its former high. The company’s new CFO recently highlighted a new three-year transformation plan focused on building market share in the natural foods sector, expanding higher margin digital services and rolling out six sigma/lean initiatives to improve operating efficiencies. UNFI is also rolling out a simplified contract structure with their clients which will eliminate layers of complexity positioning the company to achieve greater operating efficiencies overtime. There remains a wide gap between relatively low UNFI margins, and those some smaller distributors are able to achieve. Success on the transformation plan should allow the company to not only narrow that gap overtime but exceed their smaller peers due to their greater size, scale, and higher margin proprietary service offerings. The new transformation initiatives have potential to accelerate profit growth and significantly improve future free cash flow generation. UNFI also has an extensive asset base, and a distribution network across all 50 states and 10 Canadian providences. The company has an extensive distribution and warehouse network, providing a significant margin of safety. As the transformation plan progresses the company says it will focus on optimizing their distribution assets to further improve asset utilization and enhance company financial returns. We believe UNFI long-term upside potential may be multiples of the current share price given our estimation of their long-term earnings power, near 30% discount to book value and Enterprise Value to Revenue of only .1 times! The greatest near-term risk in the company transformation plan would be a delayed recovery in company margins due to the unexpected disruptions from consolidating the Firm’s distribution network.”
A close-up view of organic fruits and vegetables in a local retail store.
United Natural Foods, Inc. (NYSE:UNFI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held United Natural Foods, Inc. (NYSE:UNFI) at the end of the third quarter which was 23 in the previous quarter. While we acknowledge the potential of United Natural Foods, Inc. (NYSE:UNFI) 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 United Natural Foods, Inc. (NYSE:UNFI) and shared Miller Deep Value Strategy’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.