Should You Sell Cactus (WHD) to Avoid Future Losses?

TimesSquare Capital Management, an equity investment management company, released its “U.S. Small Cap Growth Strategy” first-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the quarter the fund returned 5.77% (net), compared to a 7.58% return for the Russell 2000 Growth Index. Despite a decline in many equity markets in January, they rebounded over the following two months, resulting in a robust 2024 first quarter. In addition, please check the fund’s top five holdings to know its best picks in 2024.

TimesSquare Capital U.S. Small Cap Growth Strategy highlighted stocks like Cactus, Inc. (NYSE:WHD), in the first quarter 2024 investor letter. Cactus, Inc. (NYSE:WHD) designs and manufactures pressure control and spoolable pipes. The one-month return of Cactus, Inc. (NYSE:WHD) was 2.75%, and its shares gained 27.44% of their value over the last 52 weeks. On June 18, 2024, Cactus, Inc. (NYSE:WHD) stock closed at $51.65 per share with a market capitalization of $3.394 billion.

TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding Cactus, Inc. (NYSE:WHD) in its first quarter 2024 investor letter:

"We often see the ebb and flow of the Energy sector tied to underlying commodity prices. In this area, we seek low-cost exploration & production companies with high-yielding acreage or specialized service providers. Cactus, Inc. (NYSE:WHD), a manufacturer of wellhead and pressure control equipment used in various stages of energy production, surged ahead by 11%. Fourth quarter revenues and profits outpaced Street estimates. We trimmed the position in recognition that the rig count is expected to be down for the year due to industry consolidation and a weaker natural gas market."

An oil and gas engineer looking at a production tree, inspecting its pressure control equipment.

Cactus, Inc. (NYSE:WHD) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held Cactus, Inc. (NYSE:WHD) at the end of the first quarter which was 17 in the previous quarter. Cactus, Inc. (NYSE:WHD) generated revenue of $274 million and adjusted EBITDA of $95 million in the quarter. While we acknowledge the potential of Cactus, Inc. (NYSE:WHD) 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 addition, please check out our hedge fund investor letters Q1 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.