Ariel Investments, an investment management company, released its “Ariel Fund” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. Global markets in 2024 exceeded forecasts, primarily due to the overwhelming success of the “magnificent seven,” or mega-cap technology stocks. Despite the concentration of gains, the optimism was fueled by the U.S. election results, solid earnings growth, and a healthy labor market. The fund returned -0.66% in the quarter trailing both the Russell 2500 Value and Russell 2500 Indices, which returned -0.26% and +0.62%, respectively. Ariel Fund increased +11.80%, outpacing the Russell 2500 Value Index’s +10.98% return and just short of the Russell 2500 Index +12.00% gain, over the trailing one-year period. For more information on the fund’s top picks in 2024, please check its top five holdings.
Ariel Fund highlighted stocks like Leslie’s, Inc. (NASDAQ:LESL), in the fourth quarter 2024 investor letter. Leslie’s, Inc. (NASDAQ:LESL) is a direct-to-consumer pool and spa care brand. The one-month return of Leslie’s, Inc. (NASDAQ:LESL) was -8.52%, and its shares lost 69.60% of their value over the last 52 weeks. On January 28, 2024, Leslie’s, Inc. (NASDAQ:LESL) stock closed at $2.04 per share with a market capitalization of $377.82 million.
Ariel Fund stated the following regarding Leslie’s, Inc. (NASDAQ:LESL) in its Q4 2024 investor letter:
“U.S. direct-to-consumer pool and spa care services company, Leslie’s, Inc. (NASDAQ:LESL) also traded lower following another consecutive quarter of disappointing financial and operating results. Soft consumer demand driven by weather-related headwinds and continued price sensitivity on large discretionary purchases weighed on the top-line. Product margins also remained under pressure as the company struggled to unwind its higher-cost inventory. In response, LESL’s new executive leadership team introduced three key strategic initiatives focused on personalizing communication and product offerings by leveraging local consumer information and data across different markets while improving existing-store sales and productivity. Although we have been deeply disappointed with this investment, we are optimistic the new efforts will drive meaningful improvements to the business and position the company for long-term success. At today’s valuation, LESL appears to have more upside than downside and the company’s loyal client base, vertically integrated supply chain, scale advantage and seamless customer experience remain differentiators.”
A close-up of a pool with freshly applied chemicals, showing the efficacy of the company’s products.
Leslie’s, Inc. (NASDAQ:LESL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Leslie’s, Inc. (NASDAQ:LESL) at the end of the third quarter which was 21 in the previous quarter. Leslie’s, Inc. (NASDAQ:LESL) reported sales of $398 million for the fiscal fourth quarter, a decrease of 8%, which aligned with the company’s guidance. While we acknowledge the potential of Leslie’s, Inc. (NASDAQ:LESL) 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 Leslie’s, Inc. (NASDAQ:LESL) and shared the list of best all-time low stocks to buy. Leslie’s, Inc. (NASDAQ:LESL) was the greatest detractor from Ariel Fund’s performance during Q3 2024. In addition, please check out our hedge fund investor letters Q3 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.