SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The uncertainly prevailing in the market seems to be fueled by constant speculation about macro causes over which the businesses have any control and so much capital concentrated in few enterprises. In the fourth quarter, the strategy returned -7.55% on a gross basis (-7.73% net) compared to a 0.33% return for the Russell 2000 Index and -1.06% for the Russell 2000 Value Index. The strategy returned 5.53% on a gross basis (4.73% net) for the trailing twelve months compared to 11.54% and 11.54% respectively for the indexes over the same period. In addition, please check the top 5 holdings of the strategy to know its best pick in 2024.
In its fourth quarter 2024 investor letter, SouthernSun Small Cap Strategy emphasized stocks such as Oxford Industries, Inc. (NYSE:OXM). Headquartered in Atlanta, Georgia, Oxford Industries, Inc. (NYSE:OXM) is an apparel company that offers men’s and women’s sportswear and related products. The one-month return Oxford Industries, Inc. (NYSE:OXM) was -13.93%, and its shares lost 24.63% of their value over the last 52 weeks. On February 6, 2024, Oxford Industries, Inc. (NYSE:OXM) stock closed at $74.04 per share, with a market capitalization of $1.163 billion.
SouthernSun Small Cap Strategy stated the following regarding Oxford Industries, Inc. (NYSE:OXM) in its Q4 2024 investor letter:
“In the fourth quarter, we initiated a position in Oxford Industries, Inc. (NYSE:OXM). The company is a portfolio of high margin brands that (in their words) “evoke happiness.” The business has been built by acquisitions, and they own several well-known clothing brands, including: Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tides, Beaufort Bonnet and Duck Head.
In the past 8 years, OXM’s sales have grown by nearly 50%; gross margin has increased from 57% to 63%, essentially doubling operating income in that time frame. We believe that gross margins are strong because of their direct-to-consumer strategy through their wholly-owned, brand-specific retail stores, on-line presence, and limited wholesale partnerships.
We believe the company has opportunities for profitable organic growth. In addition, their strong cash flows and balance sheet could enable them to continue to acquire new brands for their portfolio. In our opinion, management has demonstrated the ability to market and manage these brands effectively with omnichannel digital expertise. They have more than 330 “full price” brand-specific retail stores, and a handful of outlet stores for Tommy Bahama and Jonny Was. They added 30 new stores in 2024, and they have a plan to continue expanding their retail, brick and mortar presence…” (Click here to read the full text)
A woman shopping in one of the company’s retail stores, searching for the perfect item.
Oxford Industries, Inc. (NYSE:OXM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held Oxford Industries, Inc. (NYSE:OXM) at the end of the third quarter which was 15 in the previous quarter. In the third quarter, Oxford Industries, Inc. (NYSE:OXM) generated net sales of $308 million decreased compared to sales of $327 million in Q3 2023. While we acknowledge the potential of Oxford Industries, Inc. (NYSE:OXM) 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 Oxford Industries, Inc. (NYSE:OXM) and shared the list of top luxury clothing stocks to buy according to hedge funds. 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.