Ariel Investments, an investment management company, released its “Ariel Small Cap Value Strategy” first-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the first quarter of 2024, US indexes continued to exceed expectations. This rally was fueled by excitement surrounding artificial intelligence (AI), robust corporate earnings growth, declining inflation, and expectations for interest rate cuts. In this backdrop, Ariel Small Cap Value Tax-Exempt Composite rose +3.97% gross of fees (+3.71% net of fees) and outperformed the +2.90% return of the Russell 2000 Value Index but fell short of the +5.18% gain of the growthier Russell 2000 Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Ariel Small Cap Value Strategy highlighted stocks like MGP Ingredients, Inc. (NASDAQ:MGPI), in the first quarter 2024 investor letter. MGP Ingredients, Inc. (NASDAQ:MGPI) produces and distributes distilled spirits, branded spirits, and food ingredients. MGP Ingredients, Inc.’s (NASDAQ:MGPI) one-month return was -11.64%, and its shares lost 27.62% of their value over the last 52 weeks. On June 5, 2024, MGP Ingredients, Inc. (NASDAQ:MGPI) stock closed at $74.04 per share with a market capitalization of $1.63 billion.
Ariel Small Cap Value Strategy stated the following regarding MGP Ingredients, Inc. (NASDAQ:MGPI) in its first quarter 2024 investor letter:
“Also in the quarter, we initiated a new position in leading spirits manufacturer, MGP Ingredients, Inc. (NASDAQ:MGPI). After years of successfully developing products for third parties, MGPI entered the branded spirits business. Leveraging its scale and know-how, MGPI is turning existing relationships into growth stories by acquiring and scaling niche premium brands. A recent strategic decision to shut down a distillery in Kansas and concerns around peak whiskey demand amidst a challenging macro environment have placed pressure on the stock. However, we believe the core business is stable and expect branded spirit acquisitions to drive top-line growth and expand margins longer-term.”
A close-up of an iconic bottle of branded spirit produced by the distillery.
MGP Ingredients, Inc. (NASDAQ:MGPI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held MGP Ingredients, Inc. (NASDAQ:MGPI) at the end of the first quarter which was 21 in the previous quarter. Due to the closing of the Atchison distillery, MGP Ingredients, Inc.’s (NASDAQ:MGPI) consolidated sales for the quarter dropped 15% from the prior year period. While we acknowledge the potential of MGP Ingredients, Inc. (NASDAQ:MGPI) 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 MGP Ingredients, Inc. (NASDAQ:MGPI) and shared SouthernSun Small Cap Strategy’s views on the company. 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.
