SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, the strategy returned -11.32% on a gross basis (-11.48% net) compared to a -9.48% return for the Russell 2000 Index and -7.74% for the Russell 2000 Value Index. The strategy returned -12.55% on a gross basis (-13.21% net) for the trailing twelve months compared to -4.01% and -3.12% 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 2025.
In its first-quarter 2025 investor letter, SouthernSun Small Cap Strategy highlighted stocks such as The Timken Company (NYSE:TKR). The Timken Company (NYSE:TKR) is a leader in engineered bearings and industrial motion products. The one-month return of The Timken Company (NYSE:TKR) was -9.63%, and its shares lost 25.09% of their value over the last 52 weeks. On April 25, 2025, The Timken Company (NYSE:TKR) stock closed at $64.95 per share with a market capitalization of $4.561 billion.
SouthernSun Small Cap Strategy stated the following regarding The Timken Company (NYSE:TKR) in its Q1 2025 investor letter:
“The Timken Company (NYSE:TKR), a global leader in engineered bearings and industrial motion products, was a top contributor in the first quarter. Organic revenue declined 3%, largely due to softer demand in Europe, and adjusted EBITDA fell 9% — a slightly better result than expected, aided by cost-saving initiatives. Demand for TKR’s wind turbine bearings in China has finally stabilized and changes made to the product to lower cost have helped regain market share and increase profitability. Management remains cautious on the 2025 demand outlook and is proactively targeting approximately $75 million in cost reductions through workforce adjustments and accelerated footprint optimization. Separately, the company announced that its CEO, who had been in the role for just six months, would be stepping down. Following conversations with the company, we believe the decision was driven by personal reasons rather than performance or strategic misalignment. The former CEO, Rich Kyle, has returned as interim CEO while the board conducts a search for a permanent successor. While near-term challenges persist—including softness in certain end markets, tariff headwinds, and a leadership transition, we believe TKR remains a compelling long-term investment. The company’s diversified portfolio of niche, market-leading engineered bearings and industrial motion products, solid financial flexibility (net debt/EBITDA of 2x), and attractive valuation at a low double-digit multiple of EPS support our positive outlook.”
A close-up of a precision-engineered bearing from the company, gleaming in the light.
The Timken Company (NYSE:TKR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held The Timken Company (NYSE:TKR) at the end of the fourth quarter, compared to 25 in the third quarter. The Timken Company (NYSE:TKR) reported $1.07 billion in revenues for the fourth quarter of 2024, which was down 1.6% from last year. While we acknowledge the potential of The Timken Company (NYSE:TKR) 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 The Timken Company (NYSE:TKR) and shared the list of Jim Cramer’s latest stock moves. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.