Argosy Investors, an investment management company, released its first-quarter 2024 investor letter. A copy of the same can be downloaded here. The fund ended the first quarter with 46.4% of the portfolio in cash and short-term government bonds and year-to-date, the S&P 500 returned 10.6%. The firm stays long-term oriented, opting to invest less aggressively when possibilities are few and to invest more aggressively when opportunities are more easily identifiable in the market. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Argosy Investors highlighted stocks like Endava plc (NYSE:DAVA), in the first quarter 2024 investor letter. Endava plc (NYSE:DAVA) is a technology services provider for clients in the consumer products, healthcare, mobility, and retail verticals. The one-month return of Endava plc (NYSE:DAVA) was 12.12%, and its shares lost 42.68% of their value over the last 52 weeks. On June 28, 2024, Endava plc (NYSE:DAVA) stock closed at $29.24 per share with a market capitalization of $1.689 billion.
Argosy Investors stated the following regarding Endava plc (NYSE:DAVA) in its first quarter 2024 investor letter:
“Going back to at least 2017 with research on Syntel that ultimately led to Syntel’s acquisition by Atos, I have spent a lot of time understanding and investing in IT services. IT services generally earn extremely high returns on capital, and historically have augmented organic growth with acquisitions that build capabilities in other technical or geographical areas. Over time, IT services have evolved from relatively low-skilled IT infrastructure monitoring and troubleshooting, and now some companies are more focused on customer-facing activities. This new generation of IT services businesses is involved in custom application development, generating next generation experiences for customers. Admittedly, the buzzwords in this industry are annoying and it can be sometimes difficult to understand the scope of services companies offer, and how much overlap there is with the older generation of IT services businesses. The main differentiator is that most of their work is on a time-and-materials basis, whereas legacy providers were replacing a previously insourced cost and needed to offer fixed price contracts to win business by guaranteeing customers superior cost to insourcing. Finally, one of the main characteristics of Endava plc’s (NYSE:DAVA) business model is that its engagements are project-based and have single deliverables for completion. This makes the business more sensitive to the economic cycle relative to legacy IT providers who are, again, generally replacing an ongoing function previously performed by a company’s internal team, i.e. is recurring in nature.
Right now is an interesting time to add to our investment in DAVA because the company has experienced a hangover from the COVID pandemic surge in spending. The pandemic caused significant IT investments to accommodate work-from-home policies and an expectation of permanent changes to how business was conducted, from remote sales calls to social distancing in manufacturing operations and more. From fiscal 2019 through fiscal 2023, sales grew at a 28.9% compound growth rate (‘CAGR’). This is a small decline from the 31.0% CAGR from 2017 to 2019, when the business was much smaller. To frame this more succinctly, in the last six years, the business has increased revenue by 5x…” (Click here to read the full text)
A tech expert in a suit presenting a new IT strategy in front of a corporate audience.
Endava plc (NYSE:DAVA) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 16 hedge fund portfolios held Endava plc (NYSE:DAVA) at the end of the first quarter which was 10 in the previous quarter. In the quarter, Endava plc’s (NYSE:DAVA) revenues came in at £174.4 million, which was within revenue guidance. This is an 11.8% year-over-year decline in constant currency from £203.5 million during the same period last year. While we acknowledge the potential of Endava plc (NYSE:DAVA) 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.
We discussed Endava plc (NYSE:DAVA) in another article and shared Polen U.S. SMID Company Growth Strategy’s views on the company. 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.
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