Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” first quarter 2024 investor letter. A copy of the letter can be downloaded here. In the first quarter, its Investor Class fund ARTQX returned 5.61%, Advisor Class fund APDQX posted a return of 5.65%, and Institutional Class fund APHQX returned 5.71%, compared to an 8.23% return for the Russell Midcap Value Index. Divergent sector positioning, including above-benchmark concentration in communication services and lower exposure in industrials, was a major contributing factor to the underperformance. Holdings in information technology, real estate, and consumer staples contributed to the strategy’s performance in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Artisan Mid Cap Value Fund highlighted stocks like LKQ Corporation (NASDAQ:LKQ), in the first quarter 2024 investor letter. LKQ Corporation (NASDAQ:LKQ) distributes vehicle products and its parts to repair, maintain, and accessorize automobiles. The one-month return of LKQ Corporation (NASDAQ:LKQ) was -8.98%, and its shares lost 24.88% of their value over the last 52 weeks. On June 17, 2024, LKQ Corporation (NASDAQ:LKQ) stock closed at $40.74 per share with a market capitalization of $10.868 billion.
Artisan Mid Cap Value Fund stated the following regarding LKQ Corporation (NASDAQ:LKQ) in its first quarter 2024 investor letter:
“As the market has been grinding higher and higher, it likely comes as no surprise that value investors like us haven’t been very active in terms of new purchases. In Q1, we added two names to the portfolio: Alliant Energy and LKQ Corporation (NASDAQ:LKQ). LKQ is the dominant player in salvage/aftermarket collision parts distribution in North America, with over 70% market share. Roughly 85%–90% of collision repairs are paid for by insurers, which value low-cost parts and quick repair turnarounds to minimize claims costs. LKQ’s low prices, distribution scale and industry-leading parts availability make it an attractive supplier for DRP (direct repair program)-affiliated collision repair shops that represent an increasingly large portion of the industry. Over the last decade, LKQ has also become the largest mechanical parts distributor in Europe. As is the case in North America, independent European mechanics value LKQ’s reliable distribution and competitive pricing. The European business has improved operationally over the last five years as LKQ has focused on the integration of its various acquisitions to drive margin and free cash flow improvements. LKQ operates in end markets with limited cyclicality as 90% of revenues are tied to non-discretionary spending and reliably has strong free cash flow generation. The company also meets our requirement for a sound financial condition as its debt load is manageable at 2X EBITDA due to its attractive free cash flow. At 12X P/E, shares trade at a distinct discount to their historical 10-year average of 14X and are also cheaper relative to LKQ’s auto parts retailer peers, which arguably have similar long-term growth profiles.”
A worker in a factory using a robotic arm to assemble automotive body panels.
LKQ Corporation (NASDAQ:LKQ) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held LKQ Corporation (NASDAQ:LKQ) at the end of the first quarter which was 25 in the previous quarter. LKQ Corporation’s (NASDAQ:LKQ) revenue for the first quarter of 2024 was $3.7 billion an increase of 10.6% year over year. While we acknowledge the potential of LKQ Corporation (NASDAQ:LKQ) 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 LKQ Corporation (NASDAQ:LKQ) and shared the list of best car repair stocks to buy. 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.