Champion Homes (SKY) Fell Due to Investors’ Concerns Over Higher Interest Rates

Wasatch Global Investors, an asset management company, released its “Wasatch Micro Cap Value Strategy” second-quarter 2024 investor letter. A copy of the same can be downloaded here. During the second quarter, the strategy fell but significantly outperformed the benchmark Russell Microcap Index which declined -5.27%. The firm did not observe any major changes in its long-term investment position during the quarter. However, it acknowledges that the majority of equities fell as investors' concerns about the possibility of a recession, higher-for-longer inflation, and interest rates. A small group of stocks that are thought to be doing well because of the artificial intelligence (AI) boom kept going up at the same time. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Wasatch Micro-Cap Value Strategy highlighted stocks like Champion Homes, Inc. (NYSE:SKY), in the second quarter 2024 investor letter. Skyline Champion Corporation renamed to Champion Homes, Inc. (NYSE:SKY) in August 2024. Champion Homes, Inc. (NYSE:SKY) engages in the manufacturing and sales of mobile homes and other manufactured housing. The one-month return of Champion Homes, Inc. (NYSE:SKY) was 1.31%, and its shares gained 25.13% of their value over the last 52 weeks. On September 9, 2024, Champion Homes, Inc. (NYSE:SKY) stock closed at $87.30 per share with a market capitalization of $5.027 billion.

Wasatch Micro-Cap Value Strategy stated the following regarding Champion Homes, Inc. (NYSE:SKY) in its Q2 2024 investor letter:

"Champion Homes, Inc. (NYSE:SKY) was the greatest detractor from strategy performance during the second quarter. The company is one of the biggest homebuilders in North America, specializing in modular homes for the single-family, multi-family and hospitality segments as well as accessory dwelling units and park-model recreational vehicles. Late last year, the stock price was down as investors fretted over the effects of higher interest rates on housing. But we maintained our position at a significant weight because we thought Skyline was attractively valued. As earnings and management’s outlook improved in the first quarter of this year, we saw an increase in the stock price. Unfortunately, the price fell in the second quarter as the company was again viewed as part of the rate[1]sensitive housing group. Also weighing on the stock were a disappointing earnings report and some poorly timed charges that should be reversed next quarter. Over the longer term, we remain undeterred with respect to Skyline because the company targets lower-income buyers, who continue to face a shortage of affordable housing."

A close up of the exterior of a factory-built home.

Champion Homes, Inc. (NYSE:SKY) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held Champion Homes, Inc. (NYSE:SKY) at the end of the second quarter which was 22 in the previous quarter. While we acknowledge the potential of Champion Homes, Inc. (NYSE:SKY) 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 Q2 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.