Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” first quarter 2024 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund returned 3.36% compared to a 2.90% return for the Russell 2000 Value Index. Small value and small quality have outperformed over longer periods, although small caps have significantly underperformed over the past ten years. The firm focuses on the high-quality compounders in its portfolio. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
FPA Queens Road Small Cap Value Fund highlighted stocks like United Natural Foods, Inc. (NYSE:UNFI) in the first quarter 2024 investor letter. United Natural Foods, Inc. (NYSE:UNFI) is a distributor of natural, organic, specialty, produce, and conventional grocery and non-food products. United Natural Foods, Inc.’s (NYSE:UNFI) one-month return was 25.41%, and its shares lost 48.25% of their value over the last 52 weeks. On June 4, 2024, United Natural Foods, Inc. (NYSE:UNFI) stock closed at $12.14 per share with a market capitalization of $721.563 million.
FPA Queens Road Small Cap Value Fund stated the following regarding United Natural Foods, Inc. (NYSE:UNFI) in its first quarter 2024 investor letter:
“United Natural Foods, Inc. (NYSE:UNFI) distributes natural and organic food. Whole Foods is a 20% customer, but UNFI has done a reasonable job diversifying its product and customer base, with a big boost from its acquisition of SuperValu in 2018. The company’s share price has declined after a year’s worth of earnings misses and guidance revisions. UNFI is suffering from a combination of volatile food prices, consumers trading down from high-priced organic food items, and pricing and execution mistakes. Distribution is usually a resilient business model and, on a normalized basis, UNFI looks cheap. But UNFI is in full bore turnaround mode. Most distributors run pretty lean, and we are wary of UNFI’s ability to wring operating efficiencies out of the business. Funds that could be used to pay down debt are required for warehouse automation investments. We lost confidence in UNFI and exited our position.”
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, 25 hedge fund portfolios held United Natural Foods, Inc. (NYSE:UNFI) at the end of the first quarter which was 29 in the previous quarter. In the first quarter, United Natural Foods, Inc. (NYSE:UNFI) saw a 50basis point decline in net sales to $7.8 billion compared to the previous year’s period. This decline was primarily caused by a continued downward trend in units sold year over year. 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 FPA Queens Road Small Cap Value Fund’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q1 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.
