Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. In the fourth quarter, its Investor Class fund ARTQX returned 11.21%, Advisor Class fund APDQX posted a return of 11.20%, and Institutional Class fund APHQX returned 11.17%, compared to a 12.11% return for the Russell Midcap Value Index. For the full year, ARTQX, APDQX, and APHQX returned 18.15%, 18.25%, and 18.35%, respectively, compared to 12.71% for the index. The portfolio did well in the market with double-digit gains but trailed the Russell Midcap Value Index in Q4. However, it outperformed in the prior three quarters, leading to strong results compared to the index and peer group for 2023. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Artisan Mid Cap Value Fund featured stocks like NNN REIT, Inc. (NYSE:NNN) in the fourth quarter 2023 investor letter. NNN REIT, Inc. (NYSE:NNN) is a publicly traded REIT that invests in properties subject to long-term net leases. On March 26, 2024, NNN REIT, Inc. (NYSE:NNN) stock closed at $41.96 per share. One-month return of NNN REIT, Inc. (NYSE:NNN) was 2.94%, and its shares lost 2.12% of their value over the last 52 weeks. NNN REIT, Inc. (NYSE:NNN) has a market capitalization of $7.672 billion.
Artisan Mid Cap Value Fund stated the following regarding NNN REIT, Inc. (NYSE:NNN) in its fourth quarter 2023 investor letter:
“In the first few days of October, we made our sole new purchase of the quarter: NNN REIT, Inc. (NYSE:NNN). NNN is a real estate investment trust (REIT) that executes triple net leases—a type of lease in which the tenant pays, in addition to rent and utilities, three other property expenses: insurance, maintenance and taxes. Typical advantages of triple net lease REITs versus other REITs involve lower leverage, lower capital intensity and a more stable rent roll that contribute to the ability to smartly fund growth. NNN focuses on free-standing single-tenant buildings whose tenants are in service retail industries (e.g., convenience stores, restaurants, gyms and car washes). Overall, NNN has been in the triple net business for 40+ years, has a seasoned and conservative management team and has operated successfully in and out of cycles. NNN’s approach is one of focus, discipline and creating economic value per share, which are traits often lacking in the real estate industry. As evidence, during a period of low cap rates and cheap leverage, NNN didn’t aggressively pursue acquisitions to improve short-term earnings but instead extended the duration of its borrowings to lock in low financing costs. NNN has an average duration on its debt of 12 years, which is more than double the peer average. Importantly, this provides NNN balance sheet protection in a rising rate environment, allowing the company to go on the offensive while other industry participants pull back due to soaring borrowing costs. At our time of purchase, the market’s desire to exit businesses with interest rate risk wasn’t differentiating between individual REITs and how they would perform in a higher for longer interest rate environment. In the case of NNN, our purchase was well timed as the stock rose 25% in Q4 as inflation data indicated we are probably past the peak of a rate tightening cycle.”
An exterior view of a modern retail property, embodying a landlord’s real estate investment.
NNN REIT, Inc. (NYSE:NNN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, NNN REIT, Inc. (NYSE:NNN) was held by 23 hedge fund portfolios, compared to 24 in the previous quarter, according to our database.
We discussed NNN REIT, Inc. (NYSE:NNN) in another article and shared best REIT dividend stocks to buy for 2024. In addition, please check out our hedge fund investor letters Q4 2023 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.
