Diamond Hill Capital, an investment management company, released its "Large Cap Strategy" fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. Despite inconsistent Q4 gains, markets ended the year positively. The portfolio trailed the Russell 1000 Index benchmark in Q4 and 2024. In Q4, the strategy returned -2.27% (net) vs -2.75% returns for the index and in 2024 the strategy returned 12.06% (net) vs 24.51% returns for the index. To get an idea of the fund's best choices for 2024, check out its top 5 positions.
In its fourth quarter 2024 investor letter, Diamond Hill Large Cap Strategy emphasized stocks such as Lululemon Athletica Inc. (NASDAQ:LULU). Lululemon Athletica Inc. (NASDAQ:LULU) designs, distributes and retails athletic apparel, footwear, and accessories. The one-month return Lululemon Athletica Inc. (NASDAQ:LULU) was -9.62%, and its shares lost 19.53% of their value over the last 52 weeks. On March 20, 2025, Lululemon Athletica Inc. (NASDAQ:LULU) stock closed at $324.45 per share with a market capitalization of $39.513 billion.
Diamond Hill Large Cap Strategy stated the following regarding Lululemon Athletica Inc. (NASDAQ:LULU) in its Q4 2024 investor letter:
"Among our top individual contributors in Q4 were General Motors and new position Lululemon Athletica Inc. (NASDAQ:LULU). Lululemon is a leading technical apparel brand with strong affinity in the Americas and a growing international presence. As competition in the US has increased, investors have questioned whether the brand faces structural challenges -- particularly as sales have also slowed recently. However, we believe these challenges in the US are primarily transitory and that lululemon will be able to sustain its margins. Further, we believe lululemon is a high quality, cash-generative company with a clean balance sheet -- consequently, we capitalized on what we view as an attractive discount to our estimate of intrinsic value to initiate a position in the quarter. Shares rose in Q4 as the consumer environment in the Americas stabilized, international growth remains outsized and margins have proven resilient."
A store employee in an athletic apparel store restocking merchandise.
Lululemon Athletica Inc. (NASDAQ:LULU) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held Lululemon Athletica Inc. (NASDAQ:LULU) at the end of the fourth quarter which was 45 in the previous quarter. Lululemon Athletica Inc.'s (NASDAQ:LULU) third-quarter net revenue reached $2.4 billion, up 9%, (or 8% in constant currency) and comparable sales in constant dollars increased by 3%. While we acknowledge the potential of Lululemon Athletica Inc. (NASDAQ:LULU) 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.