Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. In the third quarter, the fund returned 7.48% compared to a 10.15% return for the Russell 2000 Value Index. Year-to-date, the fund returned 8.1% compared to a 9.22% return for the index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.

FPA Queens Road Small Cap Value Fund highlighted stocks like Darling Ingredients Inc. (NYSE:DAR), in the third quarter 2024 investor letter. Darling Ingredients Inc. (NYSE:DAR) develops, produces, and sells natural ingredients from edible and inedible bio-nutrients. The one-month return of Darling Ingredients Inc. (NYSE:DAR) was 10.72%, and its shares lost 0.34% of their value over the last 52 weeks. On November 8, 2024, Darling Ingredients Inc. (NYSE:DAR) stock closed at $40.68 per share with a market capitalization of $6.47 billion.

FPA Queens Road Small Cap Value Fund stated the following regarding Darling Ingredients Inc. (NYSE:DAR) in its Q3 2024 investor letter:

"Darling Ingredients Inc. (NYSE:DAR) is the world’s largest rendering operation with about 17% of the global market and a higher share in the core U.S. market.30 The business is one part industrial where scale and route density are big advantages – they collect unused animal waste from slaughterhouses and butchers. But the business is also one part commodity producer – their plants process this waste into fats, bone meal and ingredients that trade at prices set by the global markets. Finally, DAR’s Diamond Green Diesel joint venture with Valero turns animal fats into green energy – a business that benefits from renewables subsidies and tax credits. The company took on debt to make three large acquisitions in 2022, adding additional complexity as DAR integrates the acquisitions and de-levers. The stock has sold off on weakness in DAR’s commodity end markets, falling renewable identification number (RIN) prices, and lower earnings and guidance reported over the past year.

A selection of pet food ingredients being prepared in a kitchen for quality and safety testing.