Polen Capital, an investment management company, released its “Polen U.S. Small Company Growth Strategy” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. According to the Russell 2000 Growth Index, U.S. small cap growth stocks experienced a 1.7% increase in the fourth quarter and a 15% rise for the year 2024. In what proved to be a tumultuous quarter, small caps surged over 10% following the U.S. Presidential election in November, but nearly all of those gains were lost in December as the U.S. Federal Reserve indicated a more gradual reduction in interest rates expected in 2025. In the fourth quarter, the fund delivered 5.09% gross, and 4.73% net of fees compared to a 1.70% return for the Russell 2000 Growth Index. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.
In its fourth quarter 2024 investor letter, Polen U.S. Small Company Growth Strategy emphasized stocks such as Fabrinet (NYSE:FN). Fabrinet (NYSE:FN) offers optical packaging and precision optical, electro-mechanical, and electronic manufacturing services. The one-month return Fabrinet (NYSE:FN) was -8.07%, and its shares gained 9.50% of their value over the last 52 weeks. On February 5, 2024, Fabrinet (NYSE:FN) stock closed at $213.80 per share, with a market capitalization of $7.695 billion.
Polen U.S. Small Company Growth Strategy stated the following regarding Fabrinet (NYSE:FN) in its Q4 2024 investor letter:
“During the quarter, we initiated positions in four new investments: Willscot Holdings, Trex, Fabrinet (NYSE:FN), and Belden. We also added to several existing positions.
Fabrinet is a leader in advanced optical and precision electromechanical manufacturing, delivering high-value components for data centers, cloud computing, and high-speed networks. The company benefits from strong secular growth drivers in AI, digitization and network infrastructure, an asset-light model, and consistent free cash flow conversion, positioning it for a robust earnings trajectory over the cycle. We are excited about Fabrinet’s growth as NVIDIA, its largest customer, continues to scale, and the company’s telecom business also appears to be bottoming, which should provide added tailwind to growth.”
An automated assembly line displaying the advanced packaging technology used by the company.
Fabrinet (NYSE:FN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Fabrinet (NYSE:FN) at the end of the third quarter which was 31 in the previous quarter. In the fiscal second quarter of 2025, Fabrinet’s (NYSE:FN) generates revenue of $834 million representing an increase of 17% from a year ago and 4% from Q1. While we acknowledge the potential of Fabrinet (NYSE:FN) 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 Fabrinet (NYSE:FN) and shared Coatue’s most important AI stocks. 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.