Patient Capital Management, a value investing firm, released its “Patient Capital Opportunity Equity Strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. During the quarter, the strategy returned 5.58% net of fees compared to the S&P 500’s 5.89% return. According to a three-factor performance attribution model, allocation and selection effects contributed positively to the portfolio’s performance while interaction effects contributed negatively. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Patient Capital Management highlighted stocks like QXO, Inc. (NASDAQ:QXO) in the third quarter 2024 investor letter. QXO, Inc. (NASDAQ:QXO) is a business application, technology, and consulting company. The one-month return of QXO, Inc. (NASDAQ:QXO) was 2.25%, and its shares lost 40.51% of their value over the last 52 weeks. On October 17, 2024, QXO, Inc. (NASDAQ:QXO) stock closed at $15.42 per share with a market capitalization of $6.318 billion.
Patient Capital Management stated the following regarding QXO, Inc. (NASDAQ:QXO) in its Q3 2024 investor letter:
“This quarter we entered two new positions, while exiting two positions. We entered QXO, Inc. (NASDAQ:QXO) a newly formed entity headed up by serial Founder and CEO, Brad Jacobs, and focused on the $800B building products distribution industry. The company has +$5B ready to deploy against their roll-up strategy in a highly fragmented industry. The management team plans to implement their proven playbook of bringing scale, and technology infrastructure to an inefficient market. We participated in their last PIPE (private investment in publicly traded entity) transaction in mid-July where the company raised capital at $9.14. Management set the price to provide investors with a ~25% IRR over a ten-year investment horizon, one of the most investor friendly capital raises we have ever seen. While no deals have been announced, the company is targeting >$50B of annual revenue in ten years. We have high conviction in Brad Jacobs’ proven track record and believe QXO is set up well to become a long-term compounder.
QXO Inc. (QXO) was a top contributor to the portfolio after being purchased in mid-July. We participated in the PIPE transaction providing us with an attractive cost basis of $9.14 for a stock that was trading in the mid-$80s at the time. As the newly raised capital began trading on the market, the value of the stock traded down to a more normalized level in the mid-teens. We believe QXO is set up well to be a long-term compounder led by a proven management team. The company is well funded with +$5B on their balance sheet to begin executing against their roll-up strategy in the highly fragmented $800B building products distribution industry. We believe Brad Jacobs will utilize his historical playbook of bringing consolidation, scale and technology innovation to an inefficient industry.”
QXO, Inc. (NASDAQ:QXO) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 5 hedge fund portfolios held QXO, Inc. (NASDAQ:QXO) at the end of the second quarter which was 4 in the previous quarter. While we acknowledge the potential of QXO, Inc. (NASDAQ:QXO) 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 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.