Fiduciary Management Inc. (FMI), an independent money management firm, released its “FMI International Equity Strategy (Unhedged)” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. The investment philosophy of the firm is to invest in durable business franchises that are selling at a discount to their intrinsic value. In the fourth quarter, the strategy returned -7.24% (gross) and -7.41% (net) compared to -8.36% return for the iShares MSCI EAFE ETF. In addition, please check the fund’s top five holdings to know its best picks in 2024.

FMI International Equity Strategy highlighted stocks like Arch Capital Group Ltd. (NASDAQ:ACGL), in the fourth quarter 2024 investor letter. Arch Capital Group Ltd. (NASDAQ:ACGL) offers insurance, reinsurance, and mortgage insurance products. One-month return of Arch Capital Group Ltd. (NASDAQ:ACGL) was -1.28% and its shares gained 16.06% of their value over the last 52 weeks. On January 10, 2025, Arch Capital Group Ltd. (NASDAQ:ACGL) stock closed at $90.17 per share with a market capitalization of $33.926 billion.

FMI International Equity Strategy stated the following regarding Arch Capital Group Ltd. (NASDAQ:ACGL) in its Q4 2024 investor letter:

"Arch Capital Group Ltd. (NASDAQ:ACGL) is a global provider of specialty insurance, reinsurance, and mortgage insurance. Their core philosophy is to cycle manage their underwriting and allocate capital to where there is more attractive (firmer) pricing. We believe this is one of the only proven ways to earn excess returns in a mostly commoditized business. Arch has executed this playbook masterfully over the last few years, as they harvested strong profits in mortgage insurance to reinvest in P&C insurance and reinsurance markets. Arch’s results have led to strong stock price performance. We have trimmed back ACGL in recent periods and sold our remaining 1.5% position in November in pursuit of better risk/reward opportunities for the portfolio."

A close-up image of an insurance policy with hands standing firmly on top, conveying security.

Arch Capital Group Ltd. (NASDAQ:ACGL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held Arch Capital Group Ltd. (NASDAQ:ACGL) at the end of the third quarter which was 37 in the previous quarter. While we acknowledge the potential of Arch Capital Group Ltd. (NASDAQ:ACGL) 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 Arch Capital Group Ltd. (NASDAQ:ACGL) and shared the list of undervalued insurance stocks to invest in. 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.