Polen Capital, an investment management company, released its “Polen U.S. Small Company Growth Strategy” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. The third quarter had a strong finish for U.S. small-cap equities, driven by interest rate reductions and fading recessionary concerns. In the third quarter, the fund delivered 7.65% gross, and 7.35% net of fees compared to an 8.41% return for the Russell 2000 Growth Index. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.
Polen U.S. Small Company Growth Strategy highlighted stocks like Dutch Bros Inc. (NYSE:BROS), in the third quarter 2024 investor letter. Dutch Bros Inc. (NYSE:BROS) operates and franchises drive-thru shops. The one-month return of Dutch Bros Inc. (NYSE:BROS) was 32.72%, and its shares gained 61.73% of their value over the last 52 weeks. On November 15, 2024, Dutch Bros Inc. (NYSE:BROS) stock closed at $46.61 per share with a market capitalization of $7.187 billion.
Polen U.S. Small Company Growth Strategy stated the following regarding Dutch Bros Inc. (NYSE:BROS) in its Q3 2024 investor letter:
“During the quarter, we instituted six new additions and five complete sales. We also added to and trimmed several existing positions. Additions included NV5 Global, Rambus, Paylocity Holdings, Insight Enterprises, elf Beauty, and Dutch Bros Inc. (NYSE:BROS).
Dutch Bros is a drive-through coffee and beverage company with just under 1,000 locations. Its most significant concentration of stores is in Washington, Oregon, California, and Texas, though the footprint is expanding nationally. The company has carved out a niche vs. larger competitors with a more playful, down-to-earn vibe, innovative menu, cult-like culture, and customer service focus. Free cash flow is low since the company is investing heavily in new stores at high returns on capital—which we find attractive, as it appears to be growing at a sustainable rate. Over the long term, we expect Dutch Bros to generate 30% earnings growth.”
A closeup of a customer tasting a freshly-made cold brew coffee product from the company’s shop.
Dutch Bros Inc. (NYSE:BROS) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Dutch Bros Inc. (NYSE:BROS) at the end of the second quarter which was 33 in the previous quarter. In the third quarter, Dutch Bros Inc. (NYSE:BROS) generated $338 million in revenues representing 28% increase compared to previous year’s quarter. While we acknowledge the potential of Dutch Bros Inc. (NYSE:BROS) 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 Dutch Bros Inc. (NYSE:BROS) and shared Baird Mid Cap Growth Equity Strategy’s views on the company. 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.