Aristotle Capital Management, LLC, an investment management company, released its “Value Equity Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The U.S. equity market finished the year strongly with the S&P 500 Index increasing 2.41% during the quarter. Conversely, the Bloomberg U.S. Aggregate Bond Index experienced a decrease, dropping 3.06% during the quarter. The composite returned -4.09% gross of fees (-4.14% net of fees) in the fourth quarter underperforming the -1.98% return of the Russell 1000 Value Index and 2.41% return of the S&P 500 Index. Security selection led the composite to underperform in the quarter relative to the index, while allocation had a slight negative impact. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Aristotle Value Equity Strategy highlighted stocks like Microchip Technology Incorporated (NASDAQ:MCHP), in the fourth quarter 2024 investor letter. Microchip Technology Incorporated (NASDAQ:MCHP) manufactures and distributes smart, connected, and secure embedded control solutions. The one-month return of Microchip Technology Incorporated (NASDAQ:MCHP) was 4.43%, and its shares lost 35.19% of their value over the last 52 weeks. On January 17, 2025, Microchip Technology Incorporated (NASDAQ:MCHP) stock closed at $57.97 per share with a market capitalization of $31.13 billion.
Aristotle Value Equity Strategy stated the following regarding Microchip Technology Incorporated (NASDAQ:MCHP) in its Q4 2024 investor letter:
“Microchip Technology Incorporated (NASDAQ:MCHP), the microcontroller (MCU) and analog semiconductor producer, was one of the largest detractors for the period. Revenues continued to decline amid the severe inventory correction, which has persisted in most end markets other than defense and aerospace since early 2023. In addition, Microchip’s board unexpectedly announced that CEO Ganesh Moorthy (who led the company since 2021) would retire with the current chairman and long-tenured former CEO Steve Sanghi returning. Mr. Sanghi returned on an interim basis, allowing the company to focus on turnaround efforts without near-term plans to search for a replacement. We have admired Mr. Sanghi’s skill at navigating past chip cycles and will closely track the company’s ability to execute on restructuring initiatives, which aim to resize its manufacturing footprint and reduce inventory. This includes plans to soon shut down the company’s wafer fabrication facility in Arizona, which the company expects should generate annual cash savings of approximately $90 million. Despite recent missteps in inventory management that were exacerbated by cyclical headwinds, we are optimistic about management’s plans to right-size its business. Moreover, we remain confident that Microchip’s broad portfolio is uniquely positioned to increase its market share in 16- and 32-bit MCUs and areas including IoT, 5G infrastructure, autonomous driving and data centers.”
A semiconductor wafer at various stages of fabrication, showing the company’s range of expertise.
Microchip Technology Incorporated (NASDAQ:MCHP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Microchip Technology Incorporated (NASDAQ:MCHP) at the end of the third quarter which was 46 in the previous quarter. In the September quarter, Microchip Technology Incorporated (NASDAQ:MCHP) reported $1.164 billion in net sales, down 6.2% sequentially. While we acknowledge the potential of Microchip Technology Incorporated (NASDAQ:MCHP) 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 Microchip Technology Incorporated (NASDAQ:MCHP) and shared Delaware Ivy Core Equity Fund’s views on the company in the previous quarter. 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.