Ariel Investments, an investment management company, released its “Ariel Small Cap Value Strategy” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. In 2024, mega-cap technology stocks, known as the “magnificent seven,” outperformed expectations. The bullish sentiment was driven by U.S. election results, strong earnings momentum, and a robust labor market. Ariel Small Cap Value Tax-Exempt Composite decreased -0.69% gross of fees (-0.83% net of fees) in the quarter, against this backdrop, compared to -1.06% and +0.33% returns of the Russell 2000 Value Index and the Russell 2000 Index, respectively. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
In its fourth quarter 2024 investor letter, Ariel Small Cap Value Strategy emphasized stocks such as MGP Ingredients, Inc. (NASDAQ:MGPI). MGP Ingredients, Inc. (NASDAQ:MGPI) produces and distributes distilled spirits, branded spirits, and food ingredients. The one-month return of MGP Ingredients, Inc. (NASDAQ:MGPI) was -5.21%, and its shares lost 60.97% of their value over the last 52 weeks. On February 28, 2025, MGP Ingredients, Inc. (NASDAQ:MGPI) stock closed at $32.74 per share with a market capitalization of $696.39 million.
Ariel Small Cap Value Strategy stated the following regarding MGP Ingredients, Inc. (NASDAQ:MGPI) in its Q4 2024 investor letter:
“In contrast, leading spirits manufacturer, MGP Ingredients, Inc. (NASDAQ:MGPI) was the largest performance detractor over the period. The company pre-announced a quarterly earnings miss resulting in a subsequent reduction to full-year 2024 guidance and a downward revision to 2025 estimates. Lower consumer demand for whisky has resulted in weaker-than-anticipated sales and significantly higher inventory levels at distributors. In response, MGPI has reduced its distillery production to only meet its own brand needs. While concerns around inventory levels give us near-term pause, we believe MGPI’s future growth is tied to its transition from distilling solutions to selling its own branded spirits.”
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 30 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 fourth quarter compared to 23 in the third quarter. 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 the list of best beverage stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.