Third Avenue Small-Cap Value Fund Sold Comfort Systems USA (FIX) As It Grew Above Small-Cap

Third Avenue Management, an investment management company based in New York City, released its “Third Avenue Small-Cap Value Fund” first quarter 2024 investor letter. A copy of the letter can be downloaded here. In the first quarter, the fund returned 6.31% versus the 2.90% for its most relevant benchmark, the Russell 2000 Value Index. The fund delivered solid relative and absolute returns in the quarter. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Third Avenue Small-Cap Value Fund highlighted stocks like Comfort Systems USA, Inc. (NYSE:FIX), in the first quarter 2024 investor letter. Comfort Systems USA, Inc. (NYSE:FIX) offers mechanical and electrical installation, renovation, maintenance, repair, and replacement services for the mechanical and electrical services The one-month return of Comfort Systems USA, Inc. (NYSE:FIX) was -3.49%, and its shares gained 92.41% of their value over the last 52 weeks. On June 27, 2024, Comfort Systems USA, Inc. (NYSE:FIX) stock closed at $315.93 per share with a market capitalization of $11.286 billion.

Third Avenue Small-Cap Value Fund stated the following regarding 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 highlight the nuances between managing the portfolio's Long-Term Compounder investments (“LTC”) versus Time Arbitrage/Special Situation (“TA/SS”) positions (see Portfolio Strategy section below for more on these investment types).

While Sphere exemplifies a TA/SS investment, Comfort Systems was an ideal LTC position. We affectionately labeled Comfort Systems a “thin file” investment, meaning there was little drama attached to the thesis, and Comfort Systems quietly compounded book value over time. It is a low-margin business, yet it generates cash flows, and its management prudently allocates capital. Comfort Systems was owned by the Fund for over seven years and compounded shareholder return at a prodigious 37% annual rate over the ownership period. Comfort’s end markets, management team, culture, and compensation systems checked our boxes. We sold the position as Comfort Systems grew its market capitalization to $9 billion. Thus, it was no longer a small cap. It was an exceptional investment for Fund shareholders. We wish the company continued success and are grateful for their efforts."

A construction worker in safety gear installing a ceiling fan in a high-rise building.

Comfort Systems USA, Inc. (NYSE:FIX) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Comfort Systems USA, Inc. (NYSE:FIX) at the end of the first quarter which was 34 in the previous quarter. Comfort Systems USA, Inc. (NYSE:FIX) revenue for the first quarter of 2024 was $1.5 billion, an increase of $362 million or 31% from Q1 2023. While we acknowledge the potential of Comfort Systems USA, Inc. (NYSE:FIX) 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.

We discussed Comfort Systems USA, Inc. (NYSE:FIX) in another article and shared Carillon Chartwell Small Cap Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.