Polen Capital, an investment management company, released its “Polen Global SMID Company Growth” third quarter 2024 investor letter. A copy of the letter can be downloaded here. In the third quarter, the fund returned 7.41 (gross) and 7.40% (net) compared to a 9.37% return for the MSCI ACWI SMID Net Index. Negative stock selection and sector and country allocation led the portfolio to underperform in the quarter. Despite volatile market sentiments, global small and mid-cap equities posted gains in the third quarter. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Polen Global SMID Company Growth highlighted stocks like TopBuild Corp. (NYSE:BLD) in the Q3 2024 investor letter. TopBuild Corp. (NYSE:BLD) is an insulation and other building material products distributor. The one-month return of TopBuild Corp. (NYSE:BLD) was -5.56%, and its shares gained 19.58% of their value over the last 52 weeks. On November 20, 2024, TopBuild Corp. (NYSE:BLD) stock closed at $351.10 per share with a market capitalization of $10.358 billion.
Polen Global SMID Company Growth stated the following regarding TopBuild Corp. (NYSE:BLD) in its Q3 2024 investor letter:
“We initiated a new position in TopBuild Corp. (NYSE:BLD), a company focused on U.S. insulation distribution and installation services in the residential construction, commercial, and mechanical insulation markets. The business model resembles Installed Building Products, a new addition to our U.S. Small Company Growth Portfolio. TopBuild has a larger presence in less consolidated commercial and industrial markets. Overall, we believe both businesses offer exposure to the secular tailwinds from years of underbuilding in new homes and a high-return business model that should prove more resilient than traditional homebuilders. Historically, both companies have gained share from independent mom-and-pop players, given their scale and greater value proposition. TopBuild is a company with 15%+ EPS growth, -20% EBITDA margin, and a 20%+ Return on Invested Capital and Cash Flow Return on Invested Capital, as well as a history of improving returns since its 2015 spinoff from Masco. We funded the new position in TopBuild by reducing our cash position.”
A specialized team of experts installing building materials in a pre-construction plan.
TopBuild Corp. (NYSE:BLD) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held TopBuild Corp. (NYSE:BLD) at the end of the third quarter which was 42 in the previous quarter. TopBuild Corp.’s (NYSE:BLD) third quarter sales increased 3.6% to $1.37 billion. While we acknowledge the potential of TopBuild Corp. (NYSE:BLD) 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 TopBuild Corp. (NYSE:BLD) and shared the list of best engineering stocks to invest in. 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.