Here’s Why L1 Capital International Fund Divested its Holdings in Danaher Corporation (DHR)

L1 Capital, an investment management firm, released its “L1 Capital International Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. A copy of the letter can be downloaded here. In the June quarter, the fund returned -3.0% (net of fees) compared to 0.3% return for the Benchmark (all in Australian dollars). The Australian dollar appreciated 1.8% against the U.S. dollar in the quarter and 2.7% against the Euro, decreasing the Fund and Benchmark Australian dollar reported quarterly returns. The Fund returned 22.2% (net of fees) outperforming the Benchmark return of 19.8% (all in Australian dollars) for the year ended 30 June 2024. The Australian dollar appreciated 0.3% against the U.S. dollar and 2.0% against the Euro, thus currency had a limited impact on Australian dollar returns of the Fund and Benchmark over the past 12 months. Please check the fund’s top five holdings to know its best picks in 2024.

L1 Capital International Fund highlighted stocks like Danaher Corporation (NYSE:DHR), in the second quarter 2024 investor letter. Danaher Corporation (NYSE:DHR) manufactures and markets professional, medical, industrial, and commercial products and services. The one-month return of Danaher Corporation (NYSE:DHR) was -9.38%, and its shares gained 13.61% of their value over the last 52 weeks. On July 9, 2024, Danaher Corporation (NYSE:DHR) stock closed at $239.79 per share with a market capitalization of $177.609 billion.

L1 Capital International Fund stated the following regarding Danaher Corporation (NYSE:DHR) in its Q2 2024 investor letter:

“We made a number of relatively modest adjustments to the Portfolio in the June 2024 quarter, totalling less than 10% of the Fund’s investments. We divested our remaining holding in Danaher Corporation (NYSE:DHR). Danaher is one of the leading providers of equipment and services to the life sciences and diagnostics industries and is one the best run industrial businesses in the world. Many companies aim to emulate the ‘Danaher Business System’ of continuous improvement. We have no concerns with the quality of Danaher, the share price simply increased above our view of fair value. A core principle of our investment process is to maintain valuation discipline and we divested our investment, purely on valuation grounds. Danaher has moved to our Bench of potential future investments. Danaher’s share price has fallen around 10% since we sold our investment, and if it continues to drift down, we may have the opportunity to reinvest in a very high-quality business at a more attractive valuation.”

A healthcare professional in a lab coat holding a microscope and looking at a slide under the lens.

Danaher Corporation (NYSE:DHR) is in 24th position on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 98 hedge fund portfolios held Danaher Corporation (NYSE:DHR) at the end of the first quarter which was 90 in the previous quarter.  While we acknowledge the potential of Danaher Corporation (NYSE:DHR) 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 Danaher Corporation (NYSE:DHR) in another article and shared RGA Investment Advisors’ views on the company in the previous quarter. Danaher Corporation (NYSE:DHR) is in 4th position on the list of best healthcare stocks to buy according to hedge funds. 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.