Optimist Fund, an investment management company, released its fourth quarter investor letter. A copy of the letter can be downloaded here. 2024 proved to be another impressive year for the fund, with a return of around 67%. Since the fund's inception, it has achieved approximately 15% annualized returns, net of fees, and the firm is nearing its 3-year anniversary. The firm believes that the portfolio has significant upside over the next 5 years. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.

Optimist Fund highlighted stocks like Xponential Fitness, Inc. (NYSE:XPOF), in the fourth quarter 2024 investor letter. Xponential Fitness, Inc. (NYSE:XPOF) is a North America-based boutique fitness franchisor. The one-month return of Xponential Fitness, Inc. (NYSE:XPOF) was 18.73%, and its shares gained 66.95% of their value over the last 52 weeks. On February 4, 2024, Xponential Fitness, Inc. (NYSE:XPOF) stock closed at $17.43 per share with a market capitalization of $841.92 million.

Optimist Fund stated the following regarding Xponential Fitness, Inc. (NYSE:XPOF) in its Q4 2024 investor letter:

"Xponential Fitness, Inc. (NYSE:XPOF) – We initially invested in Xponential Fitness based on the thesis that it was an undervalued fitness franchisor led by a talented founder who owned over 10% of the company. We believed the founder’s leadership would drive long-term value creation by successfully scaling boutique fitness brands. However, shortly after our investment, the CEO resigned. As their leadership was the cornerstone of our thesis, we exited the position."

A group of people in the fitness studio doing a yoga or pilates class.

Xponential Fitness, Inc. (NYSE:XPOF) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Xponential Fitness, Inc. (NYSE:XPOF) at the end of the third quarter which was 26 in the previous quarter. Xponential Fitness, Inc. (NYSE:XPOF) reported net loss of $18 million in the third quarter of 2024 compared to a net loss of $5.2 million in Q3 2023. While we acknowledge the potential of Xponential Fitness, Inc. (NYSE:XPOF) 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 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.