ClearBridge Investments, an investment management company, released its “ClearBridge Small Cap Strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. The Fed’s rate cut in September contributed to a shift from large-cap generative AI winners to a broader range of market leadership, particularly in small-cap stocks. However, the strategy underperformed its benchmark in the third quarter because weaknesses in the communication services and IT sectors outweighed the strong performances in health care and consumer discretionary. In addition, please check the fund’s top five holdings to know its best picks in 2024.
ClearBridge Small Cap Strategy highlighted stocks like Meritage Homes Corporation (NYSE:MTH), in the third quarter 2024 investor letter. Meritage Homes Corporation (NYSE:MTH) is a US-based home builder that designs and builds single-family attached and detached homes. The one-month return of Meritage Homes Corporation (NYSE:MTH) was -17.67%, and its shares lost 11.64% of their value over the last 52 weeks. On January 6, 2025, Meritage Homes Corporation (NYSE:MTH) stock closed at $75.15 per share with a market capitalization of $5.438 billion.
ClearBridge Small Cap Strategy stated the following regarding Meritage Homes Corporation (NYSE:MTH) in its Q3 2024 investor letter:
“Our largest new position during the quarter was Meritage Homes Corporation (NYSE:MTH), in the consumer discretionary sector, which builds single family attached and detached homes in the western and southeastern U.S. While higher mortgage rates have weighed on homebuilders and the demand for housing, we continue to believe that there is a systematic shortage of housing in the U.S., and that a decline in interest rates and subsequent mortgage rates should prove a boon to homebuilders. Beyond broader sector tailwinds, we opted to move our capital from Century Communities to Meritage given the latter’s higher historical level of returns at a comparable current valuation.”
An employee of the company pointing out the features of a house to a first-time homebuyer.
Meritage Homes Corporation (NYSE:MTH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held Meritage Homes Corporation (NYSE:MTH) at the end of the third quarter which was 33 in the previous quarter. While we acknowledge the potential of Meritage Homes Corporation (NYSE:MTH) 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 Meritage Homes Corporation (NYSE:MTH) and shared the list of best residential real estate stocks to buy. 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.