Third Avenue Small-Cap Value Fund sold Comfort Systems USA (FIX) as it grew above small-cap
Third Avenue Management, a New York City-based investment firm, has released its first quarter 2024 investor letter on the Third Avenue Small-Cap Value Fund. A copy of the letter can be downloaded here. In the first quarter, the fund returned 6.31% versus 2.90% for its main benchmark, the Russell 2000 Value Index. The fund delivered solid relative and absolute returns in the quarter. Additionally, you can check out the fund’s top 5 holdings to learn its best picks for 2024.
Third Avenue Small-Cap Value Fund highlighted stocks like Comfort Systems USA, Inc. (NYSE:FIX) in its Q1 2024 investor letter. Comfort Systems USA, Inc. (NYSE:FIX) provides mechanical and electrical installation, renovation, maintenance, repair, and replacement services for the mechanical and electrical services. Comfort Systems USA, Inc. (NYSE:FIX)’s one-month return was -3.49%, and its shares gained 92.41% of their value over the past 52 weeks. On June 27, 2024, Comfort Systems USA, Inc. (NYSE:FIX) stock closed at $315.93 per share with a market cap of $11.286 billion.
Third Avenue Small-Cap Value Fund stated the following about Comfort Systems USA, Inc. (NYSE:FIX) in its first quarter 2024 investor letter:
“We sold our positions in Sphere Entertainment and Comfort Systems USA, Inc. (NYSE:FIX). The two closed positions illustrate the nuances between managing the portfolio’s Long-Term Compounder (“LTC”) investments and Time Arbitrage/Special Situation (“TA/SS”) positions (see the Portfolio Strategy section below for more information on these investment types).
While Sphere is an example of a TA/SS investment, Comfort Systems was an ideal LTC position. We affectionately referred to Comfort Systems as a “thin file” investment, meaning that the thesis didn’t have much drama and Comfort Systems quietly grew its book value over time. It is a low margin business but still generates cash flows and its management allocates capital prudently. Comfort Systems was owned by the Fund for over seven years and delivered an astonishing 37% annual return to shareholders during the ownership period. Comfort’s end markets, management team, culture and compensation systems met our requirements. We sold the position when Comfort Systems grew its market cap to $9 billion. Thus, it was no longer a small cap. It was an exceptional investment for the Fund’s shareholders. We wish the company continued success and are grateful for its efforts.”
A construction worker in protective clothing installs a ceiling fan in a high-rise building.
Comfort Systems USA, Inc. (NYSE:FIX) is not on our list of the 31 most popular stocks among hedge funds. According to our database, 34 hedge fund portfolios held Comfort Systems USA, Inc. (NYSE:FIX) at the end of the first quarter, compared to 34 in the previous quarter. Comfort Systems USA, Inc. (NYSE:FIX) revenue in the first quarter of 2024 was $1.5 billion, up $362 million, or 31%, from the first quarter of 2023. While we recognize Comfort Systems USA, Inc. (NYSE:FIX)’s potential as an investment, we believe AI stocks promise higher returns and do so in a shorter period of time. If you’re looking for an AI stock that’s as promising as NVIDIA but trades at less than 5x its earnings, check out our report on the cheapest AI stock.
We have discussed Comfort Systems USA, Inc. (NYSE:FIX) in another article and shared the Carillon Chartwell Small Cap Growth Fund’s views on the company. You can also find more investor letters from hedge funds and other leading investors on our Hedge Fund Investor Letters Q1 2024 page.
CONTINUE READING: Michael Burry is selling these shares And A new dawn is dawning for US stocks.
Disclosure: None. This article was originally published at Insider Monkey.
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