Ariel Investments, an investment management company, released its “Ariel Fund” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. Due to investor excitement for stocks with an artificial intelligence (AI) theme, the bull market surged through the second quarter. The S&P 500 edged a small gain despite the loss in Mid- and Small-Cap stocks because of this narrow, momentum-driven rally. The fund decreased -5.64% in the quarter against this backdrop, underperforming the Russell 2500 Value Index’s -4.31% and the Russell 2500 Index’s -4.27% return. 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 second 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 -10.36%, and its shares lost 55.64% of their value over the last 52 weeks. On August 6, 2024, Leslie’s, Inc. (NASDAQ:LESL) stock closed at $3.03 per share with a market capitalization of $559.771 million.
Ariel Fund stated the following regarding Leslie’s, Inc. (NASDAQ:LESL) in its Q2 2024 investor letter:
“U.S. direct-to-consumer pool and spa care services company, Leslie’s, Inc. (NASDAQ:LESL), also underperformed following another consecutive quarterly decline in earnings resulting from soft consumer demand. Importantly, management confirmed a material improvement in traffic and is forecasting an earnings recovery over the second half of the year. Although we have been deeply disappointed with this investment to date, trends have improved as weather conditions normalized. Meanwhile, we believe LESL is truly differentiated by its loyal client base, vertically integrated supply chain, scale advantage and seamless customer experience. At today’s valuation, LESL appears to have more upside than downside.”
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 31 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held Leslie’s, Inc. (NASDAQ:LESL) at the end of the first quarter which was 15 in the previous quarter. Leslie’s, Inc.’s (NASDAQ:LESL) revenues in the second quarter were $189 million, an 11% decrease from Q2 2023. 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 addition, please check out our hedge fund investor letters Q2 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.
