Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. In Q3, US stocks recovered from brief periods of volatility to hit new all-time highs. The portfolio returned strong absolute returns in the third quarter but lagged the benchmark. In the quarter, its Investor Class fund ARTQX returned 8.58%, Advisor Class fund APDQX posted a return of 8.63%, and Institutional Class fund APHQX returned 8.61%, compared to a 10.08% return for the Russell Midcap Value Index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Artisan Mid Cap Value Fund highlighted stocks like Waters Corporation (NYSE:WAT) in the Q3 2024 investor letter. Headquartered in Milford, Massachusetts, Waters Corporation (NYSE:WAT) is a specialty measurement company that provides analytical workflow solutions that operate through Waters and TA segments. The one-month return of Waters Corporation (NYSE:WAT) was 4.94%, and its shares gained 39.63% of their value over the last 52 weeks. On November 14, 2024, Waters Corporation (NYSE:WAT) stock closed at $385.62 per share with a market capitalization of $21.711 billion.
Artisan Mid Cap Value Fund stated the following regarding Waters Corporation (NYSE:WAT) in its Q3 2024 investor letter:
“In the health care sector, our top contributor was Waters Corporation (NYSE:WAT). Waters is a specialty measurement company that offers analytical workflow solutions for quality assurance/quality control (QA/QC) to pharma, industrial, academic and government customers. Though the company lowered its fiscal year outlook, the cut was modest, and management’s commentary on order momentum was positive. Importantly, the China end market, which has been weak, is trending in a positive direction. We’ve held Waters in the portfolio since July 2023. At that time, we were able to initiate a position at close to a trough multiple on EV/EBIT and at a discount to peers as the stock had de-rated due to concerns about pharma capital spending. Waters is an attractive business. It has industry-leading margins that have been very stable over time, it converts most of its earnings to cash, and its free cash flow margin is around 20%. Waters has a high recurring revenue stream (about 50% of revenues), which includes consumables, services and software, and this also contributes to a stronger financial condition. The balance is instruments, which are driven by replacement, moderate market growth and innovation. Instruments sales are quite sticky because methods for testing are part of regulatory filings, which are difficult and cumbersome to change.”
A technician in a lab coat monitoring a chromatography machine.
Waters Corporation (NYSE:WAT) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held Waters Corporation (NYSE:WAT) at the end of the second quarter which was 28 in the previous quarter. In third quarter, Waters Corporation’s (NYSE:WAT) revenue grew 4% in reported and 4% in constant currency. While we acknowledge the potential of Waters Corporation (NYSE:WAT) 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 Waters Corporation (NYSE:WAT) and shared The London Company SMID Cap Strategy’s views on the company. Artisan Mid Cap Value Fund initiated a position in WAT during Q3 2023, due to its attractive business economics, sound financial condition and attractive valuation. 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.