Here’s Why Koninklijke Philips N.V. (PHG) Fell in Q1

Artisan Partners, an investment management company, released its “Artisan Value Income Fund” first quarter 2024 investor letter. A copy of the letter can be downloaded here. In Q1, US equities markets surged to new all-time highs, supported by a robust US economy. The fund’s Investor Class APFWX, Advisor Class APDWX, and Institutional Class APHWX returned 4.87%, 4.87%, and 4.98% respectively, in the quarter compared to a 10.56% return for the S&P 500 Index. The portfolio delivered a good total return in Q1 comprised of premium income and substantial capital appreciation, in line with the firm’s total return expectations. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2024.

Artisan Value Income Fund highlighted stocks like Koninklijke Philips N.V. (NYSE:PHG), in the first quarter 2024 investor letter. Koninklijke Philips N.V. (NYSE:PHG) is a health technology company. Koninklijke Philips N.V.'s (NYSE:PHG) one-month return was 0.42%, and its shares gained 40.27% of their value over the last 52 weeks. On June 5, 2024, Koninklijke Philips N.V. (NYSE:PHG) stock closed at $26.49 per share with a market capitalization of $24.918 billion.

Artisan Value Income Fund stated the following regarding Koninklijke Philips N.V. (NYSE:PHG) in its first quarter 2024 investor letter:

"Our bottom contributors were Cable One, Koninklijke Philips N.V. (NYSE:PHG) and Universal Health Realty Income Trust. Since Philips, a health care technology company, initiated a voluntary recall of its first-generation CPAP machine more than two years ago, investors have shunned the stock due to the uncertainty related to potential litigation liabilities. That has left the stock extremely undervalued. In January, Philips agreed with the US government on a proposed consent decree providing a roadmap of required actions and prohibitions—a process likely to take three years to conclude. As part of the consent decree, Philips is prohibited from selling CPAP or BiPAP sleep devices in the US. However, Philips may still service sleep and respiratory care devices already with health care provider and patients and may continue to sell other products in the US. Further, it does not impact the company’s sales outside the US. The overall terms are as expected, and there is now a path forward for Philips to eventually return to the market. We appreciate that until there is greater clarity on the total settlement cost, the stock may remain under pressure, but at the current asking price, shares sell at a significant discount to our estimates of intrinsic value."

A medical professional using a magnetic resonance imaging (MRI) system to diagnose a patient in a hospital setting.

Koninklijke Philips N.V. (NYSE:PHG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held Koninklijke Philips N.V. (NYSE:PHG) at the end of the first quarter which was 12 in the previous quarter. While we acknowledge the potential of Koninklijke Philips N.V. (NYSE:PHG) 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.

In another article, we discussed Koninklijke Philips N.V. (NYSE:PHG) and shared Artisan International Value Fund's views on the company in the second quarter 2023. In addition, please check out our hedge fund investor letters Q1 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.