Coho Partners, an investment management company released its “Relative Value Equity Strategy” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In 2024, the market is led by a handful of stocks, with NVIDIA alone contributing nearly a third of the S&P 500 Index’s total return year-to-date. The Information Technology and Communication Services sectors are performing strongly, and the Russell 1000 Growth Index has almost tripled the returns of the Russell 1000 Value Index year-to-date. Economically Sensitive sectors have returned more than double that of the Demand Defensive sectors. Against this backdrop, the strategy underperformed with a -1% YTD return, relative to the Russell 1000 Value Index’s 6.6% return and the S&P 500 Index’s 15.3% return. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Coho Relative Value Equity Strategy highlighted stocks like Constellation Brands, Inc. (NYSE:STZ), in the second quarter 2024 investor letter. Constellation Brands, Inc. (NYSE:STZ) is a company that produces and distributes beer, wine, and spirits. The one-month return of Constellation Brands, Inc. (NYSE:STZ) was 2.97%, and its shares gained 5.94% of their value over the last 52 weeks. On October 2, 2024, Constellation Brands, Inc. (NYSE:STZ) stock closed at $255.67 per share with a market capitalization of $46.594 billion.
Coho Relative Value Equity Strategy stated the following regarding Constellation Brands, Inc. (NYSE:STZ) in its Q2 2024 investor letter:
“We also eliminated Conagra (CAG) in favor of a better risk/return for Constellation Brands, Inc. (NYSE:STZ). We are encouraged by the Constellation Board’s decision to eliminate the dual voting share class and reprioritize capital allocation away from acquisitions and towards returns to shareholders. With capital spending expected to decline and leverage near the company’s target, more cash flow should be available for shareholders. STZ is now focused on the higher growth and the higher margin premium beer category, which they dominate with Corona Extra, Modelo Especial and Pacifico. Additionally, the Wine and Spirits business, which has been disappointing is no longer a meaningful part of STZ’s business as it now accounts for less than 10% of overall earnings. We expect STZ to deliver low double-digit growth in both earnings and dividends for many years to come, which is consistent with the Board’s recent approval of a 13.5% dividend hike.”
A winemaker examining a glass of red wine from a barrel in a cellar.
Constellation Brands, Inc. (NYSE:STZ) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held Constellation Brands, Inc. (NYSE:STZ) at the end of the second quarter which was 47 in the previous quarter. Constellation Brands, Inc. (NYSE:STZ) has reported a 6% increase in revenue for the fiscal first quarter of 2025, in line with the company’s full-year guidance and medium-term outlook for the Investor Day targets. While we acknowledge the potential of Constellation Brands, Inc. (NYSE:STZ) 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 Constellation Brands, Inc. (NYSE:STZ) and shared the list of best beverage stocks that pay dividends. 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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