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 Sprouts Farmers Market, Inc. (NASDAQ:SFM) in the first quarter 2024 investor letter. Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a retailer of fresh, natural, and organic food products. Sprouts Farmers Market, Inc.’s (NASDAQ:SFM) one-month return was 4.94%, and its shares gained 132.56% of their value over the last 52 weeks. On June 4, 2024, Sprouts Farmers Market, Inc. (NASDAQ:SFM) stock closed at $78.35 per share with a market capitalization of $7.872 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding Sprouts Farmers Market, Inc. (NASDAQ:SFM) in its first quarter 2024 investor letter:
“Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a natural grocer with great merchandising and best-in-class margins. The company has very high returns on capital, great new store economics, and they are accelerating their unit growth from 12 stores a year to 35 stores this year on a base of roughly 400 stores. Over the past year, the stock has performed well after reporting strong operating results and from a low initial valuation. The stock jumped when the company reported 23Q4 results and gave strong 2024 guidance on Feb. 22, 2024. We have maintained our position and allowed it to appreciate. Although SFM’s share price has increased faster than bottom line results, we believe SFM still trades in the “range of reasonableness” for a high-quality, non- cyclical franchise that can reinvest capital at high rates of return.”
A bright, colorful display of fresh produce in a grocery store.
Sprouts Farmers Market, Inc. (NASDAQ:SFM) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Sprouts Farmers Market, Inc. (NASDAQ:SFM) at the end of the first quarter which was 30 in the previous quarter. The sales of Sprouts Farmers Market, Inc. (NASDAQ:SFM) increased by 9% in the quarter, with comparable store sales growing by 4% and diluted earnings per share by 14%, compared to adjusted diluted earnings per share in the prior year first quarter. While we acknowledge the potential of Sprouts Farmers Market, Inc. (NASDAQ:SFM) 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 Sprouts Farmers Market, Inc. (NASDAQ:SFM) and shared the list of stocks Jim Cramer is Recommending. 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.