Ariel Investments, an investment management company, released its “Ariel Appreciation Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, investors fled to shelter as hopes for another year of U.S. outperformance, driven by economic momentum and the new administration’s pro-business approach swiftly gave way to tariff fears and policy uncertainty, causing most of the major U.S. indices to close the quarter in the red. Against this backdrop, the fund returned -6.94% in the first quarter underperforming the Russell Midcap Value Index’s -2.11% returns, and the Russell Midcap Index’s -3.40% returns. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Ariel Appreciation Fund highlighted stocks such as Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH). Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is a cruise company that operates through Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises brands. The one-month return of Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) was -21.32%, and its shares lost 1.266% of their value over the last 52 weeks. On April 21, 2025, Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) stock closed at $16.05 per share with a market capitalization of $7.261 billion.
Ariel Appreciation Fund stated the following regarding Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) in its Q1 2025 investor letter:
Lastly, new holding, Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) declined alongside the sector during the period, following investor concerns about a potential new tax on cruise lines. Although, we believe the risk of any potential exposure is currently priced in, we note cruise lines operate globally and determining taxable income on a jurisdiction basis can be extremely complex. Generally, operators benefit from exemptions under Section 883 of the IRS code and bilateral tax treaties that relieve them from paying corporate income tax on profits beyond the taxes already paid in their operating regions. The elimination of the carve-out would require a Congressional vote. Meanwhile, NCLH continues to deliver robust quarterly earnings, highlighted by strong consumer demand, healthy onboard spending, attractive pricing, solid cost containment and sustained progress on leverage reduction. Looking ahead, NCLH remains focused on right sizing its cost base and improving margins to further strengthen its foundation for sustainable and profitable growth.
A luxurious cruise ship overlooking a stunning horizon, highlighting the variety of its itineraries.
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 58 hedge fund portfolios held Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) at the end of the fourth quarter compared to 33 in the third quarter. While we acknowledge the potential of Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) 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 covered Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) and shared the list of best cruise stocks to buy according to hedge funds. Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) gained momentum last quarter after exceeding both revenue and earnings expectations. In addition, please check out our hedge fund investor letters Q1 2025 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.