Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” first quarter 2024 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund returned 3.36% compared to a 2.90% return for the Russell 2000 Value Index. Small value and small quality have outperformed over longer periods, although small caps have significantly underperformed over the past ten years. The firm focuses on the high-quality compounders in its portfolio. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
FPA Queens Road Small Cap Value Fund highlighted stocks like Deckers Outdoor Corporation (NYSE:DECK) in the first quarter 2024 investor letter. Deckers Outdoor Corporation (NYSE:DECK) designs manufactures, and markets footwear, apparel, and accessories. Deckers Outdoor Corporation’s (NYSE:DECK) one-month return was 24.63%, and its shares gained 118.66% of their value over the last 52 weeks. On June 3, 2024, Deckers Outdoor Corporation (NYSE:DECK) stock closed at $1,086.57 per share with a market capitalization of $27.346 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding Deckers Outdoor Corporation (NYSE:DECK) in its first quarter 2024 investor letter:
“Deckers Outdoor Corporation (NYSE:DECK) is a footwear and apparel company that owns the UGG, Hoka, Teva, Sanuk, and Koolaburra brands. Management has done a terrific job growing and extending the UGG franchise. Now they are replicating that success with Hoka running shoes which surpassed $1 billion in sales last year. At over thirty times forward earnings (as of Mar. 31, 2024), we have weighed Deckers’ valuation against the quality of its management team, strong brands, and net cash balance sheet and have trimmed our position.
We first bought a small position in Deckers in 2015 and 2016 when the company was struggling with supply chain issues. Its stock price has increased more than ten times since then on excellent operating performance, and we have trimmed all the way up. Given the company’s exceptional financial performance and growth, we think the stock still trades in the “range of reasonableness.”
A customer browsing a retail store, finding the perfect footwear for their casual outfits.
Deckers Outdoor Corporation (NYSE:DECK) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Deckers Outdoor Corporation (NYSE:DECK) at the end of the first quarter which was 38 in the previous quarter. While we acknowledge the potential of DECK 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 Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Deckers Outdoor Corporation (NYSE:DECK) and shared The London Company SMID Cap Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q1 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.
