Ariel Investments, an investment management company, released its “Ariel Fund” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. Due to the economy’s resilience and forecasters’ expectations of a soft landing, all major U.S. indices saw gains in the third quarter. The Federal Reserve turned its attention to the state of the labor market as interest rate reduction was implemented. Against this backdrop, Ariel Fund appreciated +12.08% in Q3 outperforming both the Russell 2500 Value and Russell 2500 indices, which returned +9.63% and +8.75%. 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 third 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 -7.27%, and its shares lost 51.01% of their value over the last 52 weeks. On October 14, 2024, Leslie’s, Inc. (NASDAQ:LESL) stock closed at $2.68 per share with a market capitalization of $495.567 million.
Ariel Fund stated the following regarding Leslie’s, Inc. (NASDAQ:LESL) in its Q3 2024 investor letter:
“By comparison, U.S. direct-to-consumer pool and spa care services company, Leslie’s, Inc. (NASDAQ:LESL) was the greatest detractor from returns over the period. The company pre-announced disappointing operating results and significantly reduced full-year guidance. Soft consumer demand driven by weather-related headwinds and increased price sensitivity on large discretionary purchases weighed on the top-line. Product margins also remain under pressure as the company struggles to unwind its higher-cost inventory. In response, LESL hired a new CEO, Jason McDonell, and our channel checks suggest his background in retail and consumer products is well-suited to drive a performance recovery. Although we have been deeply disappointed with this investment, we are encouraged by the leadership change as well as improving trends on the back of warmer and drier weather conditions. 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 serve as important 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 31 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Leslie’s, Inc. (NASDAQ:LESL) at the end of the second quarter which was 18 in the previous quarter. Leslie’s, Inc.’s (NASDAQ:LESL) total sales in the third quarter improved to down 7%from down 11% in the first half. 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.
Leslie’s, Inc. (NASDAQ:LESL) detracted from the performance of Ariel Fund in the previous quarter due to soft consumer demand. 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.