Wasatch Global Investors, an asset management company, released its “Wasatch Small Cap Growth Strategy” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. Small-cap equities experienced volatility in the third quarter but ultimately achieved solid gains. In July, they rose sharply due to optimism about a potential soft landing for the U.S. economy and anticipated interest-rate cuts. In September, the Federal Reserve lowered its benchmark interest rate for the first time since 2020. This environment led investors to shift their focus from mega-cap technology stocks to small-cap equities. Against this backdrop, the strategy gained 9.45%, outperforming the benchmark Russell 2000® Growth Index, which was up 8.41%. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Wasatch Small Cap Growth Strategy highlighted stocks like HealthEquity, Inc. (NASDAQ:HQY), in the third quarter 2024 investor letter. HealthEquity, Inc. (NASDAQ:HQY) provides financial technology solutions for healthcare and spending decisions. The one-month return of HealthEquity, Inc. (NASDAQ:HQY) was -3.50%, and its shares gained 35.51% of their value over the last 52 weeks. On January 3, 2025, HealthEquity, Inc. (NASDAQ:HQY) stock closed at $97.47 per share with a market capitalization of $8.447 billion.
Wasatch Small Cap Growth Strategy stated the following regarding HealthEquity, Inc. (NASDAQ:HQY) in its Q3 2024 investor letter:
“HealthEquity, Inc. (NASDAQ:HQY) was also among the largest detractors. The company is the largest U.S. non-bank custodian for health savings accounts (HSAs). Along with their primary business of offering HSAs, the company facilitates employer-sponsored lifestyle and commuter benefits. The stock traded lower during the quarter, likely because investors were expecting an environment of lower interest rates. Some investors think a lower interest-rate environment would reduce the company’s income earned from some of the money held on deposit for customers. But we’ve taken a close look at how the company invests its cash and believe that HealthEquity’s income is less sensitive to small interest-rate declines than many investors expect. Further, our reasons for owning the company were never based on a specific interest-rate outlook. Instead, we think HealthEquity is poised for long-term growth as more employers offer HSAs to their employees.”
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HealthEquity, Inc. (NASDAQ:HQY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held HealthEquity, Inc. (NASDAQ:HQY) at the end of the third quarter which was 25 in the previous quarter. In the third quarter, HealthEquity, Inc. (NASDAQ:HQY) achieved double-digit year-over-year growth in nearly all key metrics. While we acknowledge the potential of HealthEquity, Inc. (NASDAQ:HQY) 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 HealthEquity, Inc. (NASDAQ:HQY) and shared TimesSquare Capital U.S. Small Cap Growth 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.