Brown Capital Management, an investment management company, released its “The Brown Capital Management Mid Company Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The Mid Company Fund (Institutional shares) returned -7.85 % in the quarter significantly underperforming -3.21% return for the Russell Midcap Growth Index. The strategy focuses on EGCs with strong revenue growth, competitive advantages, and differentiated products that save time, and money or deliver significant value to consumers. In addition, check the fund’s top five holdings to know its best picks in 2024.
Brown Capital Management Mid Company Fund highlighted stocks like Teladoc Health, Inc. (NYSE:TDOC), in the second quarter 2024 investor letter. Teladoc Health, Inc. (NYSE:TDOC) is a virtual healthcare services provider that operates through Teladoc Health Integrated Care and BetterHelp segments. The one-month return of Teladoc Health, Inc. (NYSE:TDOC) was 11.12%, and its shares lost 64.39% of their value over the last 52 weeks. On September 5, 2024, Teladoc Health, Inc. (NYSE:TDOC) stock closed at $7.67 per share with a market capitalization of $1.36 billion.
Brown Capital Management Mid Company Fund stated the following regarding Teladoc Health, Inc. (NYSE:TDOC) in its Q2 2024 investor letter:
“Teladoc Health, Inc. (NYSE:TDOC) operates a telehealth platform that provides on-demand healthcare services to its members in the U.S. and abroad. Its solution connects consumers with physicians and behavioral health professionals who treat a range of conditions. The company offers its services through mobile devices, desktop, and by video or phone. Our initial excitement over Teladoc’s market-leading position, large market opportunity and compelling value proposition ran into the reality of the company’s deteriorating fundamentals. Competitive pressure, high customer-acquisition costs and poor customer retention significantly impaired the company since our initial purchase in March 2020. Additionally, questionable acquisitions and executive turnover further weighed on the business, resulting in revenue growth declining from the high-20s/low-30s to low-single-digits without any improvement in profitability. Although we pride ourselves on being patient and tolerant, it became obvious that our investment thesis was wrong, and we sold the company from the Fund.”
A doctor wearing a face mask and lab coat providing remote medical advice via video chat.
Teladoc Health, Inc. (NYSE:TDOC) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held Teladoc Health, Inc. (NYSE:TDOC) at the end of the second quarter which was 31 in the previous quarter. the second quarter consolidated revenue of Teladoc Health, Inc. (NYSE:TDOC) was $642 million, down 2% year-over-year. While we acknowledge the potential of Teladoc Health, Inc. (NYSE:TDOC) 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 Teladoc Health, Inc. (NYSE:TDOC) and shared the list of best medical AI companies. In addition, please check out our hedge fund investor letters Q2 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.