Praetorian Capital, an investment management company, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund was down by 2.29% net of fees in the third quarter. The core portfolio positions mostly declined in the quarter, while the Event-Driven book produced a slightly positive return. In the first nine months, the net performance was mostly driven by the Event-Driven book, with a modest negative return from the core book. For more information on the fund’s top picks in 2024, please check its top five holdings.
Praetorian Capital highlighted stocks like Valaris Limited (NYSE:VAL), in the third quarter 2024 investor letter. Valaris Limited (NYSE:VAL) is an offshore contract drilling services provider. The one-month return of Valaris Limited (NYSE:VAL) was -9.00%, and its shares lost 25.91% of their value over the last 52 weeks. On October 18, 2024, Valaris Limited (NYSE:VAL) stock closed at $51.22 per share with a market capitalization of $3.671 billion.
Praetorian Capital stated the following regarding Valaris Limited (NYSE:VAL) in its Q3 2024 investor letter:
“I have always believed that the only way to substantially outperform is to run a highly concentrated portfolio. When things are working, they tend to work beautifully. The flip side is that there will be times when this high level of portfolio concentration becomes a headwind to performance. To illustrate this point, during the first nine months of the year, in Dollar terms, the Fund has produced approximately $21.0 million of total P&L (before management fees). However, that figure is somewhat disingenuous as three large positions (our physical uranium entities, Valaris Limited (NYSE:VAL) along with Valaris warrants, and St. Joe) produced a loss of approximately $20.5 million. More importantly, these three positions represented approximately 49.7% of our approximately $350.2 million of capital at the end of September. Not only did these three positions cost us money, but they also tied up substantial capital. As you can imagine, it’s hard to swim fast when you’re dragging an anchor.
During September, I dedicated substantial time to the first two of these positions, by attending the World Nuclear Association meet-up in London, followed by the Pareto Energy conference in Oslo. As far as I’m concerned, the theses behind our uranium and Valaris positions are quite intact—however, the timing of the next move higher remains uncertain. Meanwhile, St. Joe continues to suffer with many other housing names, despite the fact that it should be an inflation beneficiary on account of its large land bank. …” (Click here to read the full text)
A closeup of an offshore oil rig in the international oil and gas industry in the Gulf of Mexico.
Valaris Limited (NYSE:VAL) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held Valaris Limited (NYSE:VAL) at the end of the second quarter which was 41 in the previous quarter. While we acknowledge the potential of Valaris Limited (NYSE:VAL) 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 Valaris Limited (NYSE:VAL) and shared most undervalued small-cap stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.