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What Made Cove Street Capital Sell Standex (SXI)?

Soumya Eswaran
·3-min read

Investment management company Cove Street Capital recently released its “Small Cap Value Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund returned -10.77% (net of fees) compared to -3.28% for the Russell 2000 Index and -3.64% for the Russell 2000 Value Index. For the first half of 2024, the S&P 500 is up 15%. Its biggest component, Nvidia, has increased by 150% over that time. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Cove Street Capital Small Cap Value Fund highlighted stocks like Standex International Corporation (NYSE:SXI), in the second quarter 2024 investor letter. Standex International Corporation (NYSE:SXI) manufactures and sells various products and services for commercial and industrial markets. The one-month return of Standex International Corporation (NYSE:SXI) was -1.31%, and its shares gained 19.18% of their value over the last 52 weeks. On July 10, 2024, Standex International Corporation (NYSE:SXI) stock closed at $165.00 per share with a market capitalization of $1.956 billion.

Cove Street Capital Small Cap Value Fund stated the following regarding Standex International Corporation (NYSE:SXI) in its Q2 2024 investor letter:

"Lastly, we sold our remaining shares in Standex International Corporation (NYSE:SXI), which was almost a 7-bagger for Cove Street. Given the insider selling at the company, we would suggest management scratches the same head as we do when looking at valuation. This is a growth cyclical run by a very capable CEO, and we would expect to be shareholders again in a more difficult economic cycle."

An assembly line of electronics components in a factory operated by the company.

Standex International Corporation (NYSE:SXI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held Standex International Corporation (NYSE:SXI) at the end of the first quarter which was 11 in the previous quarter. The consolidated revenue of Standex International Corporation (NYSE:SXI) for the fiscal third quarter was $177.3 million, down 3.8% year on year. While we acknowledge the potential of Standex International Corporation (NYSE:SXI) 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 Standex International Corporation (NYSE:SXI) in another article and shared top stock picks of Anchor Capital Management in 2024. In addition, please check out our hedge fund investor letters Q2 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.