Giverny Capital Asset Management, LLC, an investment management company, recently published its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. The portfolio returned 6.99% in the third quarter compared to a 5.89% return for the S&P 500 Total Return Index. The fund returned 20.16% year-to-date compared to the 22.08% return for the Index during the same period. The strategy continued to benefit from the exceptionally robust US stock market. For more information on the fund’s top picks in 2024, please check its top five holdings.
Giverny Capital Asset Management highlighted stocks like Medpace Holdings, Inc. (NASDAQ:MEDP), in the third quarter 2024 investor letter. Medpace Holdings, Inc. (NASDAQ:MEDP) is a clinical research-based drug and medical device development services provider. The one-month return of Medpace Holdings, Inc. (NASDAQ:MEDP) was -3.92%, and its shares gained 18.73% of their value over the last 52 weeks. On November 1, 2024, Medpace Holdings, Inc. (NASDAQ:MEDP) stock closed at $319.56 per share with a market capitalization of $9.932 billion.
Giverny Capital Asset Management stated the following regarding Medpace Holdings, Inc. (NASDAQ:MEDP) in its Q3 2024 investor letter:
“We used the proceeds of these sales to establish a new 2.5% position in Medpace Holdings, Inc. (NASDAQ:MEDP), a clinical research organization, or CRO, based in Cincinnati. Medpace conducts clinical drug trials for early stage biopharma companies. When young companies develop promising drug compounds, they need to conduct multiple stages of clinical trials over several years to prove the efficacy of the new drug before the Food & Drug Administration will approve it for use in people. Start-up companies do not have the expertise to conduct these trials, which are expensive and often go on for years.
Medpace was founded in 1992 by August Troendle, a former medical review officer for the Food & Drug Administration. He owns 17% of the company. The company has distinguished itself both for the quality of its scientific work and its ability to identify start-ups with the most promising compounds and the financial backing to complete years of trials before their drug gets to market. The company’s focus on good relationships with promising biotech companies has led to high returns on capital, profit margins and free cash flow margin. Biotech funding is, essentially, a speculative venture as many new compounds fail in trials. But biotech funding has been healthy in recent years and rate cuts could be a further positive, making it easier to finance trials.
Medpace is respected by the market and never trades for a cheap price. Our partners at Giverny Capital Inc. in Montreal bought some in 2023 for about 25 times the forward earnings estimate. I felt at the time that I did not understand the business well enough to buy it for us. We’ve spent a fair amount of time since then learning about the company and when the stock once again dropped to 25 times earnings, we began buying.”
A medical professional in a lab coat discussing with a colleague.
Medpace Holdings, Inc. (NASDAQ:MEDP) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Medpace Holdings, Inc. (NASDAQ:MEDP) at the end of the second quarter which was 40 in the previous quarter. Medpace Holdings, Inc.’s (NASDAQ:MEDP) third quarter revenue was $533.3 million, up 8.3% year-over-year. While we acknowledge the potential of Medpace Holdings, Inc. (NASDAQ:MEDP) 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 Medpace Holdings, Inc. (NASDAQ:MEDP) and shared LVS Advisory’s views on the company. 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.