Here’s Why Artisan Partners Trimmed its BAE Systems (BAESY) Stake

Artisan Partners, an investment management firm, published its “Artisan Global Value Fund” second-quarter 2022 investor letter – a copy of which can be downloaded here. A return of -13.40% was recorded by its Investor Class: ARTGX, -13.32% by its Advisor Class: APDGX, and -13.33% by its Institutional Class: APHGX, in the second quarter of 2022, outperforming its MSCI All Country World benchmark that delivered a -15.66% return in the same period. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Artisan Global Value Fund mentioned BAE Systems plc (NYSE:BAESY) and explained its insights for the company. Founded in 1999, BAE Systems plc (NYSE:BAESY) is a Farnborough, United Kingdom-based multinational arms, security, and aerospace company with a $30.1 billion market capitalization. BAE Systems plc (NYSE:BAESY) delivered a 28.21% return since the beginning of the year, while its 12-month returns are up by 22.80%. The stock closed at $38.19 per share on July 27, 2022.

Here is what Artisan Global Value Fund has to say about BAE Systems plc (NYSE:BAESY) in its Q2 2022 investor letter:

“BAE was up 18% in local currency terms and up 9% in US dollars (USD). BAE has benefited this year from the war in Ukraine. Defense budgets in the US and Europe, which make up the bulk of BAE’s
activity, are not going down over the next several years and will almost certainly go up. All indications in Europe suggest that years of stagnant to declining defense spending are about to reverse, though
increased defense spending will take quite some time to filter into BAE’s financial results. We are faced with a conundrum. At 14X-15X earnings, BAE is no longer obviously cheap. But its fundamentals are significantly stronger than they were before the war. Our first and strongest instinct as value investors is to sell, but at the same time, we recognize its fundamentals have improved. We have trimmed the position slightly and invested the proceeds into some other companies that appeared much more steeply discounted. It is a balancing act.”

Our calculations show that BAE Systems plc (NYSE:BAESY) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. BAE Systems plc (NYSE:BAESY) was in 1 hedge fund portfolio at the end of the second quarter of 2022. BAE Systems plc (NYSE:BAESY) delivered a 5.31% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

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