Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, its Investor Class fund ARTQX returned -5.37%, Advisor Class fund APDQX posted a return of -5.34%, and Institutional Class fund APHQX returned -5.28, compared to a -3.40% return for the Russell Midcap Value Index. Markets contracted in Q2 after widespread market participation drove US stocks upward in late 2023 and early 2024, with a few mega-cap technology names pushing the S&P 500 Index to all-time highs. Healthcare and consumer discretionary holdings held back the portfolio’s performance relative to the index. Financials, industrials, and technology holdings outperformed on the positive side. 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 Genpact Limited (NYSE:G), in the second quarter 2024 investor letter. Genpact Limited (NYSE:G) offers business process outsourcing and information technology services. The one-month return of Genpact Limited (NYSE:G) was 4.12%, and its shares lost 9.21% of their value over the last 52 weeks. On August 6, 2024, Genpact Limited (NYSE:G) stock closed at $32.32 per share with a market capitalization of $5.817 billion.
Artisan Mid Cap Value Fund stated the following regarding Genpact Limited (NYSE:G) in its Q2 2024 investor letter:
“We made one new purchase in Q2, adding Genpact Limited (NYSE:G), a business process outsourcing (BPO) company. BPO companies are third-party providers of outsourced business services. Common areas that companies outsource are HR, finance/accounting and customer care. Other areas seeing strong trends toward outsourcing are supply chain, process automation and procurement. BPO companies need to build sufficient scale to compete, which leads them to specialize in specific service areas. Genpact has built domain expertise in a few select verticals where it can be No. 1 or No. 2, focusing on financial services, consumer, health care and high-tech manufacturing industries. Companies seek to partner with Genpact to improve productivity, increase competitiveness and drive better business outcomes. Genpact has over 129,000 employees in 35+ countries to enable its offerings. At its all-time highs in early 2022, Genpact shares were selling in the low $50s at around 22X FY1 earnings. Today, they sell in the low $30s at a 10X multiple. Though the business has performed well—continuing to generate free cash flow and grow earnings—the market has become concerned about Genpact’s future. Outsourcing is a tough industry. It’s labor intensive, which can mean less pricing power, high rates of attrition and risks of labor arbitrage shifts, plus there is the need for continual technology investment. AI is also a risk. However, technological-driven automation isn’t new to this industry. Technology is continually replacing low-value work. However, Genpact is a not a commoditized body shop. The company has domain expertise, its contracts are long-term in nature, it provides services that are essential, and the tailwind of specialization via outsourcing appears to have a long runway. The business generates a lot of free cash flow, much of which is being returned to shareholders via dividends and share buybacks. At 10X enterprise value to EBITA for a business that should continue to grow, we believe odds are tilted in our favor.”
A businessperson in a suit shaking hands to seal a deal, symbolizing the company’s corporate banking services.
Genpact Limited (NYSE:G) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held Genpact Limited (NYSE:G) at the end of the first quarter which was 30 in the previous quarter. Genpact had a strong first quarter, with total revenues of $1.13 billion, up 4% year-over-year. While we acknowledge the potential of Genpact Limited (NYSE:G) 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 addition, please check out our hedge fund investor letters Q2 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.
