FPA Queens Road Small Cap Value Fund on TD SYNNEX Corporation
Thesis
TD SYNNEX is the largest global IT distributor and has broadened its mix toward software, cybersecurity and services. Its Hyve data-center unit is growing billings rapidly and is expected to account for a third of operating earnings this year. The fund sees scale advantages and continued growth in IT spending; although it has trimmed after the rally, the roughly 13 times earnings stock remains a top-five holding.
“SNX trades at roughly 13x this year’s earnings and continues to be a top 5 holding for the Fund.”
Key risks
- Rapid Hyve growth may slow
- Overall IT and hardware spending is cyclical
- The recent share-price rally may limit valuation upside