Wasatch Global Investors, an asset management company, released its “Wasatch Small Cap Growth Strategy” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. Small-cap stocks experienced the most gains in 2023 and the first quarter of 2024, with names linked to the advancement of artificial intelligence (AI) leading the market. However, most equities fell in the second quarter of 2024, even while those who benefited from AI remained strong. Small-cap benchmarks consequently showed negative returns for the period. During the quarter, the Wasatch Small Cap Growth strategy declined and underperformed the benchmark Russell 2000® Growth Index, which fell -2.92%. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Wasatch Small Cap Growth Strategy highlighted stocks like Nova Ltd. (NASDAQ:NVMI), in the second quarter 2024 investor letter. Nova Ltd. (NASDAQ:NVMI) designs and develops process control systems used to manufacture semiconductors. The one-month return of Nova Ltd. (NASDAQ:NVMI) was -11.68%, and its shares gained 82.70% of their value over the last 52 weeks. On September 13, 2024, Nova Ltd. (NASDAQ:NVMI) stock closed at $206.71 per share with a market capitalization of $6.004 billion.
Wasatch Small Cap Growth Strategy stated the following regarding Nova Ltd. (NASDAQ:NVMI) in its Q2 2024 investor letter:
“The top contributor to strategy performance during the second quarter was Nova Ltd. (NASDAQ:NVMI), which benefited as the rapidly expanding field of AI continued to transform the semiconductor industry. The company sells metrology and process control systems used in semiconductor manufacturing. Nova has profited from the increased levels of inspection necessary to produce highly complex chips used in AI applications. We think Nova deploys research and capital wisely—and is well-positioned to introduce new equipment and increase market share over the next several years. With AI euphoria heightened, we sold some shares of Nova as a risk-control measure. Because semiconductor producers and related equipment manufacturers typically face cyclical demand, our approach when investing in such companies is to trim positions on excessive optimism and add to positions on excessive pessimism.”
A technician calibrating a chemical mechanical planarization machine for precise applications.
Nova Ltd. (NASDAQ:NVMI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Nova Ltd. (NASDAQ:NVMI) at the end of the second quarter which was 22 in the previous quarter. During the second quarter, Nova Ltd. (NASDAQ:NVMI) experienced an 11% sequential revenue growth and a 28% year-over-year increase. While we acknowledge the potential of Nova Ltd. (NASDAQ:NVMI) 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 Nova Ltd. (NASDAQ:NVMI) and shared Baron Discovery Fund’s views on the company. The Nova Ltd. (NASDAQ:NVMI) continued to contribute to the Wasatch Small Cap Growth Strategy’s performance in the previous quarter, fueled by increased global demand for semiconductors. 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.