Headwaters Capital Management, an investment management company, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund returned 9.0% (+8.8% net) in the third quarter compared to a 9.2% return for the Russell Mid Cap Index. Interest rate reductions have generally driven small cap outperformance. Small caps benefited in Q3 after the Fed started the anticipated easing cycle with a 50-basis point rate drop in September. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Headwaters Capital Management highlighted stocks like Climb Global Solutions, Inc. (NASDAQ:CLMB) in the third quarter 2024 investor letter. Headquartered in Eatontown, New Jersey, Climb Global Solutions, Inc. (NASDAQ:CLMB) is a value-added information technology distribution and solutions company. The one-month return of Climb Global Solutions, Inc. (NASDAQ:CLMB) was 19.37%, and its shares gained 130.68% of their value over the last 52 weeks. On October 9, 2024, Climb Global Solutions, Inc. (NASDAQ:CLMB) stock closed at $104.15 per share with a market capitalization of $479.8 million.
Headwaters Capital Management stated the following regarding Climb Global Solutions, Inc. (NASDAQ:CLMB) in its Q3 2024 investor letter:
“Top Contributors: Climb Global Solutions, Inc. (NASDAQ:CLMB) +59%: CLMB was the second largest contributor to performance due to Q2 results where the company posted strong growth underpinned by ongoing demand for the distributor’s cybersecurity software products. CLMB also announced an accretive acquisition during the quarter, which drove positive earnings revisions. In addition to the strong operating performance, CLMB benefitted from multiple expansion when its closest competitor, Extreme Networks, was acquired by private equity at a multiple significantly above where CLMB was trading. The potential for capital deployment and multiple expansion was discussed in detail as part of the original thesis.”
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Climb Global Solutions, Inc. (NASDAQ:CLMB) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 6 hedge fund portfolios held Climb Global Solutions, Inc. (NASDAQ:CLMB) at the end of the second quarter which was 5 in the previous quarter. Climb Global Solutions, Inc.’s (NASDAQ:CLMB) second quarter net sales increased 13% year-over-year to $92.1 million. While we acknowledge the potential of Climb Global Solutions, Inc. (NASDAQ:CLMB) 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 Climb Global Solutions, Inc. (NASDAQ:CLMB) and shared Cove Street Capital’s views on the company. Headwaters Capital Management shared its investment thesis for Climb Global Solutions, Inc. (NASDAQ:CLMB) in its Q1 2024 investor letter. In addition, please check out our hedge fund investor letters Q3 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.