Fiduciary Management Inc. (FMI), an independent money management firm, released its third quarter 2023 investor letter. A copy of the same can be downloaded here. After a strong start to the year, the market gave up some of its gains in September. The FMI Large Cap Strategy declined 2.3% (gross) / 2.4% (net) in the quarter compared to a 3.27% drop in the S&P 500 Index and a 3.19% decline in the iShares Russell 1000 Value ETF. The FMI Small Cap Strategy lost 1.7% (gross) / 1.9% (net) compared to a 5.13% drop in the Russell 2000 Index and a 2.96% decline in the Russell 2000 Value Index in the same period. The FMI All Cap Equity lost 2.0% (gross) / 2.1% (net) compared to a 3.31% decline for the iShares Russell 3000 ETF and the FMI International Strategies fell 0.2% (gross) / 0.4% (net) on a currency-hedged basis and 3.3% (gross) / 3.4% (net) on a currency unhedged basis in the third quarter of 2023. In addition, please check the fund’s top five holdings to know its best picks in 2023.
FMI highlighted stocks like Sysco Corporation (NYSE:SYY) in the third quarter 2023 investor letter. Headquartered in Houston, Texas, Sysco Corporation (NYSE:SYY) markets and distributes various food and related products. On October 24, 2023, Sysco Corporation (NYSE:SYY) stock closed at $65.32 per share. One-month return of Sysco Corporation (NYSE:SYY) was -1.37%, and its shares lost 20.84% of their value over the last 52 weeks. Sysco Corporation (NYSE:SYY) has a market capitalization of $32.936 billion.
FMI made the following comment about Sysco Corporation (NYSE:SYY) in its Q3 2023 investor letter:
“Sysco Corporation (NYSE:SYY) is the largest global distributor of food and related products to the foodservice or food-away-from-home industry. Sales in the U.S. account for approximately 82% of the company’s consolidated revenue, with the remainder mainly coming from Canada, Latin America, and Europe (18%). The company provides products and related services from thousands of suppliers to over 725,000 customer locations including restaurants (~62% of sales), education and government facilities (~8%), travel and leisure establishments (~8%), healthcare facilities (~7%), and other foodservice customers (15%). Sysco possesses many business characteristics that FMI finds attractive. The company has a dominant market position in a large, growing, resilient industry. They sell necessary, consumable products. Economies of scale allow Sysco to provide a better offering than peers while also allowing them to operate with higher margins. These advantages have helped Sysco take market share over time and earn a return on capital that consistently exceeds its cost of capital. We believe that Sysco will continue to grow its market share in the large and fragmented foodservice distribution market and should be able to generate mid-single-digit EBIT growth over time. When combined with share repurchases and dividend yield, the company should generate a high-single-digit to low-double-digit total return to investors without multiple expansion. The shares are trading at a depressed valuation relative to the S&P 500 and relative to the company’s history, which we believe provides us downside protection and could generate additional upside should it revert to the historical levels.”
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Sysco Corporation (NYSE:SYY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held Sysco Corporation (NYSE:SYY) at the end of second quarter which was 34 in the previous quarter.
We discussed Sysco Corporation (NYSE:SYY) in another article and shared consumer stock options to add to your retirement portfolio. In addition, please check out our hedge fund investor letters Q3 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.
