Parnassus Investments Q2 2024 Performance Review
Introduction to Parnassus Investments
Parnassus Investments, an esteemed investment management firm, has released its "Parnassus Mid Cap Fund" investor letter for Q2 2024. The letter, available for download, reveals a -5.80% decline in the Investor Shares, underperforming the Russell Midcap Index’s -3.35% return.
Fund Performance Insights
The portfolio’s underperformance is mainly attributed to stock selection. However, the fund’s robust holdings can help mitigate market downturns and seize growth opportunities as cyclical pressures wane and long-term trends prevail.
Western Digital Corporation: A Highlight
Within the second quarter investor letter, Parnassus Mid Cap Fund highlighted several stocks, including Western Digital Corporation (NASDAQ: WDC). Western Digital, a manufacturer and distributor of data storage devices, saw a considerable one-month return of 1.83%. More impressively, its shares soared by 39.80% over the past year. By September 6, 2024, the stock closed at $60.77 per share, with a market cap of $20.872 billion.
Investment Rationale
In their letter, Parnassus Mid Cap Fund elaborated on its decision to re-initiate a position in Western Digital:
"We re-initiated a position in Western Digital Corporation (NASDAQ:WDC), a manufacturer of memory semiconductor chips and hard disk drives, as we believe earnings expectations are far too low. Semiconductors have been another of our most-alpha-generative industries, thanks to the industry’s secular tailwinds and our in-house expertise. Western Digital stands to benefit from the rapid growth of memory-hungry AI applications. The valuation for Western Digital was low relative to its peers, giving us a way to participate in AI at a reasonable valuation."
Western Digital’s Market Standing
Despite its potential, Western Digital Corporation is not listed among the 31 Most Popular Stocks Among Hedge Funds. However, by the end of Q2, 80 hedge fund portfolios had included WDC, up from 65 in the previous quarter.
Financial Performance
Western Digital posted commendable results in its fiscal fourth quarter, achieving:
Metric | Value |
---|---|
Non-GAAP Gross Margin | 36.3% |
Non-GAAP Earnings Per Share | $1.44 |
Revenue | $3.8 billion |
AI Stocks and Future Prospects
While Western Digital provides compelling investment opportunities, there is a marked confidence in AI stocks for potentially higher returns in a shorter timeframe. For instance, if you seek an AI stock as promising as NVIDIA but trading at less than 5 times its earnings, take a look at the cheapest AI stock.
Broader Market Context
In another article, Western Digital was featured among the best affordable tech stocks. Furthermore, for additional insights, peruse the hedge fund investor letters Q2 2024 page.
Conclusion
In summary, Western Digital Corporation remains a notable entry in Parnassus Mid Cap Fund’s portfolio. However, Parnassus Investments continues to weigh its options, with AI stocks being particularly attractive for future growth.
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Disclosure: None. This article was originally published at Insider Monkey.