RGA Investment Advisors, an investment management company, released its fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. At first glance, 2024 seemed to be another exceptional year for equity markets, but a closer look revealed a markedly different situation. Even the overarching narrative held its complexities. According to the prevailing story, the S&P 500 achieved impressive results, driven by excitement surrounding AI developments. The letter discussed this not to justify the fund’s performance, but to emphasize the unusual nature of 2024 in the equity markets and to pinpoint where significant tensions currently exist. These tensions also indicate areas with the greatest potential for future returns. Such imbalances cannot remain unchanged indefinitely, regardless of one’s views on AI or the geographical allocation of successful entities. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
In its fourth quarter 2024 investor letter, RGA Investment Advisors emphasized stocks such as Diageo plc (NYSE:DEO). Diageo plc (NYSE:DEO) engages in the production and distribution of alcoholic beverages. The one-month return of Diageo plc (NYSE:DEO) was -7.57%, and its shares lost 21.98% of their value over the last 52 weeks. On February 4, 2024, Diageo plc (NYSE:DEO) stock closed at $115.95 per share, with a market capitalization of $65.326 billion.
Ariel Appreciation Fund stated the following regarding Diageo plc (NYSE:DEO) in its Q4 2024 investor letter:
“During the quarter, we initiated three new investments, each in companies we have followed closely for a considerable time. At various points, we viewed them as missed opportunities; however, our experience with Mr. Market has taught us that patience often creates inevitable entry points. This quarter, some exciting opportunities presented themselves. The three investments are Amazon (NASDAQ: AMZN), Diageo plc (NYSE:DEO), and Uber (NASDAQ: UBER). We will discuss each in detail below
COVID was a bonanza for spirits companies, but the aftermath has proven challenging. The retail channel became over-inventoried, and as the on-trade (industry lingo for restaurants and bars) restocked their shelves and consumers returned to in-person gatherings, tough comparables led to slower growth rates— or even declines. In the stock market, Diageo serves as the bellwether for the spirits industry, and its woes began with questions about when the industry might return to growth. These challenges have since been compounded by a series of emergent narratives that weigh heavily on the stock today. These narratives include, but are not limited to, concerns about GLP-1 drugs altering behavior, Gen Z imbibing less than prior generations, economic struggles in emerging markets like Latin America and China, and fears of harsher regulations and warnings for the industry.…” (Click here to read the full text)
Diageo plc (NYSE:DEO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held Diageo plc (NYSE:DEO) at the end of the third quarter which was 31 in the previous quarter. Diageo plc’s (NYSE:DEO) group organic net sales declined 0.6% in fiscal year 2024, after three years of extraordinary top line growth. While we acknowledge the potential of Diageo plc (NYSE:DEO) 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 Diageo plc (NYSE:DEO) and shared the list of best alcohol stocks to buy according to analysts. 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.