Brown Capital Management, an investment management company, released its “The Brown Capital Management Small Company Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The Small Company Fund returned -6.57%, underperforming the Russell 2000 Growth index’s 2.92% decline. Fundamental and macroeconomic factors drove the underperformance of the fund in the quarter. The fund aims to identify and invest in Exceptional Growth Companies (EGCs) that focus on products and services their customers cannot live without. In addition, check the fund’s top five holdings to know its best picks in 2024.
Brown Capital Management Small Company Fund highlighted stocks like UFP Technologies, Inc. (NASDAQ:UFPT), in the second quarter 2024 investor letter. UFP Technologies, Inc. (NASDAQ:UFPT) manufactures solutions for medical devices, sterile packaging, and other highly engineered custom products. The one-month return of UFP Technologies, Inc. (NASDAQ:UFPT) was 3.60%, and its shares gained 97.69% of their value over the last 52 weeks. On September 6, 2024, UFP Technologies, Inc. (NASDAQ:UFPT) stock closed at $321.24 per share with a market capitalization of $2.465 billion.
Brown Capital Management Small Company Fund stated the following regarding UFP Technologies, Inc. (NASDAQ:UFPT) in its Q2 2024 investor letter:
“We added one new company, UFP Technologies (UFPT), to the Small Company portfolio in the second quarter of 2024. UFP Technologies, Inc. (NASDAQ:UFPT) is a designer and custom manufacturer of components, products and packaging for the medical-device industry and for various industrial and consumer markets. The company has expertise in design engineering, specialty materials and manufacturing capabilities for custom parts using specialized foams, films and plastics. The company’s clients include 26 of the 30 largest medical-device manufacturers in the world. Products in UFP’s MedTech division (87% of revenue) are used in robotic surgery, interventional and surgical devices, orthopedics, infection prevention, wound care, diagnostics and other medical areas. The company’s Advanced Components division (13% of revenue) develops and manufactures products primarily for the automotive, aerospace & defense, and other industrial markets. The company has manufacturing facilities in the U.S. and in lower-cost foreign countries.
UFP Technologies has been profitable for many years. The company’s focus over the last several years on the MedTech division has resulted in accelerated revenue growth and increased profitability. Operating margins in 2023 were 14%, up from 10% in 2018. UFP works on multiple projects for each customer and is frequently involved in co-developing these products, which often leads to manufacturing programs that provide multi-year, multi-million-dollar recurring-revenue streams. As the company continues to focus on adding value to device manufacturers in growing medical market segments, we see a long runway for organic growth and strategic acquisitions. UFP had revenue of $400 million in 2023, and is selling into an addressable market which we estimate to total at least $6 billion.”
A closeup of a pile of disposable wound care products on a lighted background.
UFP Technologies, Inc. (NASDAQ:UFPT) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held UFP Technologies, Inc. (NASDAQ:UFPT) at the end of the second quarter which was 17 in the previous quarter. While we acknowledge the potential of UFP Technologies, Inc. (NASDAQ:UFPT) 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 UFP Technologies, Inc. (NASDAQ:UFPT) and shared Wasatch Micro Cap Growth—U.S. Strategy’s views on the company. 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.
