Here’s Why Aristotle Capital’s Value Equity Strategy Decided to Sell Veralto Corporation (VLTO)

Aristotle Capital Management, LLC, an investment management company, released its “Value Equity Strategy” second quarter 2024 investor letter. A copy of the letter can be downloaded here. US markets continued their trend in the second quarter and the S&P 500 Index rose 4.28%. “Magnificent 7” drove the rally once again. The composite returned -1.55% gross of fees (‐1.61% net of fees) in the second quarter outperforming the ‐2.17% return of the Russell 1000 Value Index and trailing the 4.28% return of the S&P 500 Index. Security selection led the composite to outperform in the quarter relative to the Russell 1000 Value Index, while allocation effects detracted. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Aristotle Capital Value Equity Strategy highlighted stocks like Veralto Corporation (NYSE:VLTO), in the second quarter 2024 investor letter. Veralto Corporation (NYSE:VLTO) offers water analytics, water treatment, marking and coding, and packaging and color services. The one-month return of Veralto Corporation (NYSE:VLTO) was -5.15%, and YTD its shares gained 16.47%. On July 10, 2024, Veralto Corporation (NYSE:VLTO) stock closed at $95.81 per share with a market capitalization of $23.65 billion.

Aristotle Capital Value Equity Strategy stated the following regarding Veralto Corporation (NYSE:VLTO) in its Q2 2024 investor letter:

"In the fourth quarter of 2023, we received shares of the water and product quality company Veralto Corporation (NYSE:VLTO) when Danaher, a current Value Equity holding, spun off the business. After further assessing the now independently operated Veralto, we decided to exit our position. We believe our other holdings within the water value chain, including Xylem, American Water Works (our most recent purchase) and to some extent Ecolab, are more optimal investments."

A technician wearing a protective suit in a water treatment plant.

Veralto Corporation (NYSE:VLTO) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held Veralto Corporation (NYSE:VLTO) at the end of the first quarter which was 45 in the previous quarter. Veralto Corporation's (NYSE:VLTO) net sales for the first quarter increased 1.8% year over year to reach approximately $1.25 billion. While we acknowledge the potential of Veralto Corporation (NYSE:VLTO) 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 Veralto Corporation (NYSE:VLTO) in another article and shared the list of best new stocks to buy according to analysts. 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.