Aristotle Capital Boston, LLC, an investment advisory firm, recently released its “Small Cap Equity Strategy” investor letter for the first quarter of 2024. The letter provides a comprehensive overview of the fund’s performance, key decisions, and notable stock movements within the portfolio. During the first quarter, the fund recorded a return of 3.96% net of fees (4.11% gross of fees), which, while positive, trailed behind the Russell 2000 Index’s total return of 5.18%. The fund’s performance was hampered by security selection, though this was somewhat mitigated by positive allocation effects.
A key highlight in the letter is the discussion around ATN International, Inc. (NASDAQ:ATNI). ATN International, with a market capitalization of approximately $360.567 million, provides digital infrastructure and communications services primarily to residential, commercial, and government customers in underserved and niche markets. Over the last month, ATN International saw a notable stock return of 20.59%. However, the company’s stock has experienced a significant drop of 38.51% over the past year, reflecting a volatile market performance. On May 24, 2024, ATN International’s stock price closed at $23.54 per share.
Aristotle Capital decided to remove ATN International from its portfolio during this quarter. The letter outlines several reasons for this decision. Despite ATN’s extensive efforts to expand its broadband network in recent years, the company has faced significant competitive pressures. These pressures, combined with concerns about the company’s future capital allocation strategy, led Aristotle Capital to reassess and ultimately divest from ATN International. The decision was also influenced by ATN’s underwhelming financial performance in the first quarter. The company reported revenues of $186.8 million, which marked a modest increase of 1%. However, its adjusted EBITDA saw a decline of 3% compared to the previous year’s first quarter, signaling underlying challenges.
ATN International does not feature on Aristotle Capital’s list of the 30 most popular stocks among hedge funds, underscoring its relatively niche position within the broader market. Nevertheless, there was a noticeable increase in hedge fund interest by the end of the first quarter, with nine hedge fund portfolios holding ATN International, up from five in the previous quarter. For more detailed insights and updates, investors are encouraged to review the hedge fund investor letters for Q1 2024 available on Aristotle Capital’s website.
In addition to the specific focus on ATN International, the letter also touches on broader market trends and investment opportunities. For instance, investors looking for promising opportunities in the AI sector are advised to consider stocks that are trading at less than five times their earnings but exhibit strong potential, akin to Microsoft’s growth trajectory. Detailed reports on the most affordable and promising AI stocks are recommended for those interested in this sector.
The letter concludes with a teaser for upcoming content, including analyses of significant stock sales by renowned investor Michael Burry and their implications for the U.S. stock market. This broader context provides investors with a comprehensive view of the market landscape and potential investment strategies moving forward.
Disclosure: The information provided in this article is sourced from Aristotle Capital’s investor letter published by Insider Monkey. This expanded overview aims to offer a more detailed understanding of the fund’s activities and market insights for the first quarter of 2024.