River Road Asset Management, an investment management company released its “River Road Large Cap Value Select Fund” Q4 2024 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, AMG River Road Large Cap Value Select Fund returned 0.43% compared to (1.98%) return for the Russell 1000® Value Index. For the year 2024, the fund returned 24.59% significantly outperforming Index return of 14.37%. Stocks rallied in November after a Republican victory but declined sharply following hawkish Fed comments. Shorter duration stocks, including small caps and value, lost most of their post-election gains by the end of December. For more information on the fund’s best picks in 2024, please check its top five holdings.
In its fourth quarter 2024 investor letter, River Road Large Cap Value Select Fund emphasized stocks such as Lennar Corporation (NYSE:LEN). Lennar Corporation (NYSE:LEN) is a US-based homebuilder that operates primarily under the Lennar brand. The one-month return Lennar Corporation (NYSE:LEN) was -1.38%, and its shares lost 28.61% of their value over the last 52 weeks. On March 27, 2025, Lennar Corporation (NYSE:LEN) stock closed at $117.98 per share with a market capitalization of $31 billion.
River Road Large Cap Value Select Fund stated the following regarding Lennar Corporation (NYSE:LEN) in its Q4 2024 investor letter:
“Lennar Corporation (NYSE:LEN), one of the largest U.S. homebuilders, was the lowest contributor to active return in Q4 despite strong long-term fundamentals driven by a severe housing supply deficit of approximately two million units. The company has demonstrated remarkable market dominance, expanding its market share from under 8% pre-pandemic to 11.4% currently, powered by its differentiators in financing, land acquisition, and operational scale. This growth trajectory is particularly impressive given the challenging high-interest rate environment, where Lennar’s in-house mortgage division enables it to offer more attractive financing terms than smaller competitors. The company’s strategic evolution continues with the planned Millrose real estate investment trust (REIT) spinoff, streamlining operations toward an asset-light model that could drive higher valuation multiples.
Despite these long-term advantages, Lennar’s stock performance suffered in Q4 as mortgage rates climbed 100 bps, severely impacting affordability and causing sales to stall despite solid traffic. The company increased incentives to 10.8% of revenue (up from 8.8% in fiscal year [FY] 2023 and 3.5% in FY 2022), contributing to gross margins missing expectations by 40 bps at 22.1%. Management’s outlook turned more cautious, acknowledging a shift from the previously “constructive” environment to “more challenging” conditions. Despite near-term headwinds, management emphasized that underlying demand remains strong amid the persistent housing shortage. We maintained the position.”
A construction crew installing roof tiles on a newly built row home.
Lennar Corporation (NYSE:LEN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 70 hedge fund portfolios held Lennar Corporation (NYSE:LEN) at the end of the fourth quarter which was 68 in the previous quarter. While we acknowledge the potential of Lennar Corporation (NYSE:LEN) 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.
We covered Lennar Corporation (NYSE:LEN) in another article, where we shared Hardman Johnston Global Equity Strategy’s views on the company. 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.