Here's Why Sands Capital Select Growth Fund Exited Floor & Decor Holdings (FND)

Sands Capital, an investment management company, released its “Sands Capital Select Growth Fund” Q4 2024 investor letter. A copy of the same can be downloaded here. Select Growth primarily targets U.S. companies that are leading the way in crucial areas of positive structural transformation within the economy. The fund returned 8.8% (net) in the fourth quarter compared to 7.1% return for the benchmark, the Russell 1000 Growth Index. The fund returned 24.3% over the one year period compared to 33.4% return for the Index. You can check the fund’s top 5 holdings to know more about its best picks for 2024.

In its fourth quarter 2024 investor letter, Sands Capital Select Growth Fund emphasized stocks such as Floor & Decor Holdings, Inc. (NYSE:FND). Floor & Decor Holdings, Inc. (NYSE:FND) is a multi-channel specialty retailer of hard surface flooring and related accessories. The one-month return of Floor & Decor Holdings, Inc. (NYSE:FND) was -7.65%, and its shares lost 33.71% of their value over the last 52 weeks. On March 31, 2025, Floor & Decor Holdings, Inc. (NYSE:FND) stock closed at $80.47 per share with a market capitalization of $8.659 billion.

Sands Capital Select Growth Fund stated the following regarding Floor & Decor Holdings, Inc. (NYSE:FND) in its Q4 2024 investor letter:

"We sold Floor & Decor Holdings, Inc. (NYSE:FND) to add to higher-conviction duration growth businesses. When we initiated our position, we expected the business to benefit from a scale and cost advantage to more than double its store count in a large yet fragmented market. Over our holding period, this thesis largely played out as the business executed well, expanding from 84 to 230 stores. However, in recent years, progress has been impeded by shorter-term demand distortions in the wake of the pandemic affecting home renovation spending, broad-based consumer weakness, and soft housing market conditions. While the business remains a fit with our investment criteria, we decided to exit the position in favor of businesses with less cyclicality and greater earnings visibility."

Floor & Decor Holdings, Inc. (NYSE:FND) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Floor & Decor Holdings, Inc. (NYSE:FND) at the end of the fourth quarter compared to 23 in the third quarter. In the fourth quarter, Floor & Decor Holdings, Inc.’s (NYSE:FND) total sales increased by 5.7% from Q4 2023, and comparable store sales decreased by a better-than-expected 0.8%. While we acknowledge the potential of Floor & Decor Holdings, Inc. (NYSE:FND) 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 covered Floor & Decor Holdings, Inc. (NYSE:FND) in another article, where we shared the list of Wasatch Long/Short Alpha Fund's views on the company. In addition, please check out our hedge fund investor letters Q4 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.