ClearBridge Investments, an investment management company, released its “ClearBridge Small Cap Strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. The Fed’s rate cut in September contributed to a shift from large-cap generative AI winners to a broader range of market leadership, particularly in small-cap stocks. However, the strategy underperformed its benchmark in the third quarter because weaknesses in the communication services and IT sectors outweighed the strong performances in health care and consumer discretionary. In addition, please check the fund’s top five holdings to know its best picks in 2024.
ClearBridge Small Cap Strategy highlighted stocks like Lumen Technologies, Inc. (NYSE:LUMN) in the Q3 2024 investor letter. Lumen Technologies, Inc. (NYSE:LUMN) is a technology and communications company that provides various integrated products and services to business and residential customers. The one-month return of Lumen Technologies, Inc. (NYSE:LUMN) was -6.58%, and its shares gained 257.06% of their value over the last 52 weeks. On January 6, 2025, Lumen Technologies, Inc. (NYSE:LUMN) stock closed at $5.82 per share with a market capitalization of $5.906 billion.
ClearBridge Small Cap Strategy stated the following regarding Lumen Technologies, Inc. (NYSE:LUMN) in its Q3 2024 investor letter:
“Stock selection in the communication services sector was a significant detractor during the period, largely due to not owning Lumen Technologies, Inc. (NYSE:LUMN), which provides products and services including dark fiber, edge cloud services and internet protocol, among others. The company, which began the quarter with a $1.1 billion market cap, skyrocketed after it signed agreements with Microsoft and Corning to use its network and technologies to support their AI data center buildouts, resulting in a nearly 350% return and ending the quarter with a $7.2 billion market cap. However, despite this meteoric rise, we believe that the company remains a highly risky asset with a significantly leveraged balance sheet, and one not suitable for our focus on high-quality, long-term compounders.”
Close-up of a technician’s hands adjusting a communication router.
Lumen Technologies, Inc. (NYSE:LUMN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held Lumen Technologies, Inc. (NYSE:LUMN) at the end of the third quarter which was 18 in the previous quarter. While we acknowledge the potential of Lumen Technologies, Inc. (NYSE:LUMN) 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 Lumen Technologies, Inc. (NYSE:LUMN) and shared the list of Jim Cramer’s Hidden Gems and undervalued stocks you need to know. 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.