SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The uncertainly prevailing in the market seems to be fueled by constant speculation about macro causes over which the businesses have any control and so much capital concentrated in few enterprises. In the fourth quarter, the strategy returned -7.55% on a gross basis (-7.73% net) compared to a 0.33% return for the Russell 2000 Index and -1.06% for the Russell 2000 Value Index. The strategy returned 5.53% on a gross basis (4.73% net) for the trailing twelve months compared to 11.54% and 11.54% respectively for the indexes over the same period. In addition, please check the top 5 holdings of the strategy to know its best pick in 2024.
In its fourth quarter 2024 investor letter, SouthernSun Small Cap Strategy emphasized stocks such as Armstrong World Industries, Inc. (NYSE:AWI). Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. (NYSE:AWI) designs, manufactures, and sells ceiling and wall solutions. The one-month return of Armstrong World Industries, Inc. (NYSE:AWI) was 8.59%, and its shares gained 46.07% of their value over the last 52 weeks. On February 6, 2024, Armstrong World Industries, Inc. (NYSE:AWI) stock closed at $153.15 per share, with a market capitalization of $6.676 billion.
SouthernSun Small Cap Strategy stated the following regarding Armstrong World Industries, Inc. (NYSE:AWI) in its Q4 2024 investor letter:
“Armstrong World Industries, Inc. (NYSE:AWI), the leader in the commercial ceiling tile and grid business in the U.S., was one of the top contributors in the Small Cap strategy. When fully tallied, Armstrong’s 2024 results are expected to show double digit revenue and earnings growth made possible by strong pricing, partially offset by modestly lower volumes. We continue to be impressed by the company’s ability to maintain and expand its customer value proposition, despite an end market demand environment that has been choppy in the last few years. As an example of continued new product innovation, the company is expanding the market presence of its TEMPLOK energy efficient ceiling tiles and its low embodied carbon ceiling tiles. In addition to growth from new product innovation, Armstrong continued to execute an acquisition program in the architectural specialties division of its company during 2024, completing three bolt-on acquisitions (including one via its WAVE joint venture). We believe this acquisition program, initiated in 2016, has strengthened the company’s competitive advantage by building out its product line offerings made available to commercial architects and designers. Even after investments in new products and acquisitions, Armstrong continued to return significant cash to shareholders in the form of share buybacks and dividends and maintains a strong balance sheet.”
A skilled craftsman installing a sophisticated mineral fiber ceiling.
Armstrong World Industries, Inc. (NYSE:AWI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held Armstrong World Industries, Inc. (NYSE:AWI) at the end of the third quarter which was 25 in the previous quarter. While we acknowledge the potential of Armstrong World Industries, Inc. (NYSE:AWI) 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 Armstrong World Industries, Inc. (NYSE:AWI) and shared The London Company SMID Cap 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.