Investment management company Vulcan Value Partners recently released its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. In 2024, the US economy was stronger than expected; the large-cap stocks led the robust U.S. equities markets. Although it is still excessively high, inflation did decrease throughout the course of the year. The largest market cap U.S. Companies performed better than the whole market. Lastly, U.S. stocks outperformed the majority of equities in non-U.S. markets. During Q4 and 2024, Focus and Focus Plus were the best performing strategies while Small Cap was the worst performing. However, all strategies had positive returns for the year. In the quarter, the Large Cap Composite returned -0.1% net of fees and expenses, the Small Cap Composite returned -7.3% net, the Focus Composite returned 6.3% net, the Focus Plus composite returned 7.4% and the All-Cap Composite returned -2.5% net. For more information on the fund’s best picks in 2024, please check its top five holdings.
Vulcan Value Partners highlighted stocks like Everest Group, Ltd. (NYSE:EG) in the fourth quarter 2024 investor letter. Everest Group, Ltd. (NYSE:EG) offers insurance and reinsurance products. The one-month return of Everest Group, Ltd. (NYSE:EG) was 1.55%, and its shares lost 3.12% of their value over the last 52 weeks. On January 17, 2025, Everest Group, Ltd. (NYSE:EG) stock closed at $362.17 per share with a market capitalization of $15.566 billion.
Vulcan Value Partners stated the following regarding Everest Group, Ltd. (NYSE:EG) in its Q4 2024 investor letter:
“We purchased one new position during the quarter: Everest Group, Ltd. (NYSE:EG). Everest Group is a global reinsurance and insurance business known for its disciplined cost structure and high quality underwriting. Insurance is an inherently cyclical business. “Hard markets” occur when premium prices are high relative to insured risks. Hard markets inevitably attract more capital to the industry, causing premium prices to fall relative to insured risks, which results in a “soft market.” Soft markets lead undisciplined underwriters to post underwriting losses, removing capital from the industry, and the cycle repeats. In evaluating insurance companies, we believe that growth in tangible book value per share more closely approximates growth in intrinsic value per share than does growth in earnings per share. Compounding book value per share requires underwriting discipline. Moreover, given the cyclical nature of the business, a disciplined underwriter will have more volatile earnings in the short run than an undisciplined underwriter. Everest Group underwrites aggressively in hard markets and builds underwriting capacity during soft markets. During the most recent hard market, the company has significantly grown book value per share. We applaud Everest Group’s emphasis on growing intrinsic value per share over the long term instead of managing short-term earnings per share. We first purchased Everest Group, then called Everest Re, in our Small Cap portfolio where we held it for over thirteen years. It grew into a large cap company, and we owned it in our Large Cap portfolio for over ten years. We are pleased to be able to add Everest Group to our Focus portfolio with a margin of safety to our estimate of intrinsic value.”
A successful independent agent or broker discussing the benefits of life and health insurance with a customer.
Everest Group, Ltd. (NYSE:EG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held Everest Group, Ltd. (NYSE:EG) at the end of the third quarter which was 26 in the previous quarter. While we acknowledge the potential of Everest Group, Ltd. (NYSE:EG) 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 Everest Group, Ltd. (NYSE:EG) and shared the list of best insurance stocks for the long term. In addition, please check out our hedge fund investor letters Q4 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.