Fiduciary Management Inc. (FMI), an independent money management firm, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the third quarter, domestic and international equity markets rose. FMI has typically lagged in more speculative-driven bull markets (similar to today’s) and outperformed in more challenging environments driven by valuation framework, focus on business quality, and balance sheet strength. The FMI Large Cap strategy trades at a ~30% and ~50% discount to the 493 stocks in S& P 500 and Magnificent Seven, the FMI Small Cap strategy trades at a ~37% discount to the Russell 2000 and the FMI International strategy continues to trade at a discount to the MSCI EAFE Index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Fiduciary Management Inc. highlighted stocks like Hathaway Inc. (NYSE:BRK-B), in the third quarter 2024 investor letter. Incorporated in 1998, Berkshire Hathaway Inc. (NYSE:BRK-B) engages in insurance, freight rail transportation, and utility businesses. The one-month return of Berkshire Hathaway Inc. (NYSE:BRK-B) was 1.33%, and its shares gained 35.73% of their value over the last 52 weeks. On October 4, 2024, Berkshire Hathaway Inc. (NYSE:BRK-B) stock closed at $462.68 per share with a market capitalization of $996.872 billion.
Fiduciary Management Inc. stated the following regarding Berkshire Hathaway Inc. (NYSE:BRK-B) in its Q3 2024 investor letter:
Berkshire Hathaway Inc. (NYSE:BRK-B) is a diversified holding company that owns subsidiaries in insurance and reinsurance, freight rail transportation, utilities, energy, manufacturing, services, retail, and finance. Chairman, controlling shareholder, and famed investor Warren Buffett uses the permanent capital base of the large insurance assets – along with disciplined underwriting standards – to drive value-added investments that compound shareholder returns over time. From its inception in 1965 through 2023, Berkshire’s market value has increased at an annual growth rate of 19.8% vs. 10.2% for the S&P 500. Berkshire’s primary assets are its large insurance businesses, including GEICO, General Re, and National Indemnity, which we estimate at ~35% of the company’s value. The enduring competitive advantages of Berkshire’s insurance assets have allowed it to increase its float at a higher rate than its peers and provide low-cost funding for a strong collection of operating businesses, including BNSF Railroad, McLane Foodservice, Pilot Travel, Marmon Industries, Dairy Queen, and many others. On conservative estimates, we believe the company is trading at over a 20% discount on a sum[1]of-the-parts basis, and carries a mid-teens earnings multiple when factoring in a healthy net cash position and look-through EPS from its public equity portfolio. In an expensive market, we find the valuation to be significantly more appealing than the S&P 500. We expect a combination of strong operations and value-added acquisitions to increase the intrinsic value of the company at an above-average rate going forward.
A team of insurance professionals in a boardroom overlooking a city skyline.
Berkshire Hathaway Inc. (NYSE:BRK-B) is in 14th position on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 120 hedge fund portfolios held Berkshire Hathaway Inc. (NYSE:BRK-B) at the end of the second quarter which was 119 in the previous quarter. While we acknowledge the potential of Berkshire Hathaway Inc. (NYSE:BRK-B) 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 Berkshire Hathaway Inc. (NYSE:BRK-B) and shared the list of stocks that hedge funds and mutual funds are in love with and those that they hate according to Goldman Sachs. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.