Fred Alger Management, an investment management company, released its “Alger Mid Cap Focus Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. U.S. equity markets were favorable in the third quarter of 2024 driven by a dovish monetary policy shift by the Federal Reserve (Fed) and anticipation of a soft economic landing. At the same time, Class A shares of the fund underperformed the Russell Midcap Growth Index in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Alger Mid Cap Focus Fund highlighted stocks like Constellation Energy Corporation (NASDAQ:CEG) in the Q3 2024 investor letter. Constellation Energy Corporation (NASDAQ:CEG) engages in the generation of electricity in the United States. The one-month return of Constellation Energy Corporation (NASDAQ:CEG) was -11.83%, and its shares gained 90.33% of their value over the last 52 weeks. On November 19, 2024, Constellation Energy Corporation (NASDAQ:CEG) stock closed at $234.58 per share with a market capitalization of $73.369 billion.
Alger Mid Cap Focus Fund stated the following regarding Constellation Energy Corporation (NASDAQ:CEG) in its Q3 2024 investor letter:
“Constellation Energy Corporation (NASDAQ:CEG) is the largest producer of clean energy in the U.S., with 32,400 Megawatts of capacity, 87% of which is nuclear generated. Its nuclear, hydro, wind, and solar facilities provide 10% of all clean energy on the U.S. grid and 22% of its clean baseload power. We believe the company stands to benefit from the increasing electrification of the U.S. economy. The rise of electric vehicles, data centers, and reshoring of American manufacturing is driving U.S. electricity load growth for the first time in nearly two decades. In our view, AI workloads are projected to significantly increase energy demand from data centers over the next few years. As American enterprises seek clean and reliable energy sources, nuclear power, which is carbon-free and dependable, stands out compared to intermittent renewables like wind and solar. Constellation, as an unregulated independent power producer, benefits from low fixed costs and can capture upside from rising electricity prices. We believe that potential opportunities for earnings growth include colocation (data centers near nuclear plants) and energy-matching programs with cloud providers willing to pay premium prices for nuclear energy. The Inflation Reduction Act also provides downside protection through a guaranteed minimum price for nuclear generation. During the quarter, shares contributed to performance from two events: 1) annual electricity auctions revealed tightening markets driven by increasing demand, driving higher pricing in the Middle Atlantic states, leading management to raise their fiscal 2024 earnings projections. 2) On September 20, 2024, Constellation Energy announced the signing of a 20-year power purchase agreement with Microsoft, which includes restarting Three Mile Island’s Unit 1 to supply energy.”
A close up of a wind turbine producing electricity as the sun sets.
Constellation Energy Corporation (NASDAQ:CEG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 78 hedge fund portfolios held Constellation Energy Corporation (NASDAQ:CEG) at the end of the third quarter which was 71 in the previous quarter. While we acknowledge the potential of Constellation Energy Corporation (NASDAQ:CEG) 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 Constellation Energy Corporation (NASDAQ:CEG) and shared the list of most profitable renewable energy 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.