The London Company, an investment management company, released “The London Company Large Cap Strategy” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The US stocks’ performance was mixed in the second quarter measured by the Russell 3000 Index’s 3.2% return. The fund declined 1.9% (2.0% net) during the quarter compared to a 3.6% return for the Russell 1000 Index. For more information on the fund’s top picks in 2024, please check its top five holdings.
The London Company Large Cap Strategy highlighted stocks like TE Connectivity Ltd. (NYSE:TEL), in the second quarter 2024 investor letter. TE Connectivity Ltd. (NYSE:TEL) manufactures and sells connectivity and sensor solutions. One-month return of TE Connectivity Ltd. (NYSE:TEL) was -2.70%, and its shares gained 4.98% of their value over the last 52 weeks. On August 2, 2024, TE Connectivity Ltd. (NYSE:TEL) stock closed at $145.40 per share with a market capitalization of $44.19 billion.
The London Company Large Cap Strategy stated the following regarding TE Connectivity Ltd. (NYSE:TEL) in its Q2 2024 investor letter:
“Initiated: TE Connectivity Ltd. (NYSE:TEL) – TEL designs and manufactures connectors and sensors, supplying solutions to the transportation, industrial, and communications industries. The critical components that TEL sells have long life cycles and they make up a small percent of the overall cost of materials for a complex electronic systems (i.e. low cost but high-cost failure products), creating high switching costs and barriers to entry. TEL has leading share in the global connector market (including 30-35% share in automotive) with leverage to secular growth from the ‘electrification’ of multiple end markets. TEL’s management team has enacted successful cost- realignment strategies, driving significant margin improvement and leading to mid-teens returns on invested capital. TEL fits our process well. It has a low level of net debt, generates healthy cash flows, returns a significant amount of capital back to shareholders through its dividend and buyback program, and it currently trades at a discount to our estimate of intrinsic value and a discount to its peers. Given its strong competitive position, capital allocation philosophy, and favorable industry tailwinds, we believe TEL presents an opportunity to own a high quality compounder.”
A technician assembling a sensor on an automated assembly line.
TE Connectivity Ltd. (NYSE:TEL) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 49 hedge fund portfolios held TE Connectivity Ltd. (NYSE:TEL) at the end of the first quarter which was 42 in the previous quarter. In the fiscal third quarter, TE Connectivity Ltd. (NYSE:TEL) recorded $4 billion in sales, rising 2% organically year over year and in line with guidance. While we acknowledge the potential of TE Connectivity Ltd. (NYSE:TEL) 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.
