Ariel Investments, an investment management company, released its “Ariel Focus Fund” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. Small cap issues fell in December due to uncertainty and slower Federal Reserve easing, but investors should focus on solid fundamentals as stock prices rise. In the fourth quarter, the fund declined -1.19%, compared to -1.98% return for the Russell 1000 Value Index and the +2.41% return for the S&P 500 Index. The fund increased +13.48%, over the trailing one-year period, compared to +14.37% and +25.02%, respectively, for the indexes. In addition, please check the fund’s top five holdings to know its best picks in 2024.

In its fourth quarter 2024 investor letter, Ariel Focus Fund emphasized stocks such as Snap-on Incorporated (NYSE:SNA). Snap-on Incorporated (NYSE:SNA) manufactures and distributes tools, equipment, diagnostics, repair information, and systems solutions for professional users. The one-month return of Snap-on Incorporated (NYSE:SNA) was -3.09%, and its shares gained 19.91% of their value over the last 52 weeks. On February 28, 2025, Snap-on Incorporated (NYSE:SNA) stock closed at $341.17 per share with a market capitalization of $17.875 billion.

Ariel Focus Fund stated the following regarding Snap-on Incorporated (NYSE:SNA) in its Q4 2024 investor letter:

"Tool innovator, Snap-on Incorporated (NYSE:SNA) was the top contributor to performance in the period as the company continues to effectively navigate the growing complexity of the automotive repair industry. Amidst a challenging macro backdrop, SNA began redirecting product design, capacity and marketing efforts towards more affordable hand tools resulting in a sequential improvement in quarterly sales and gross margin expansion. We believe these results highlight SNA’s differentiated value proposition to its end markets, particularly as it continues to respond to real-time feedback and invest in new products to service unique needs of original equipment manufacturers. In our view, the automotive repair industry sports a favorable runway due to aging vehicles and the increased technological complexity associated with repair."

A workshop full of tools and supplies, showcasing the range of products available.

Snap-on Incorporated (NYSE:SNA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Snap-on Incorporated (NYSE:SNA) at the end of the fourth quarter compared to 29 in the third quarter. Snap-on Incorporated (NYSE:SNA) sales were $1,198.7 million in the fourth quarter of 2024. While we acknowledge the potential of Snap-on Incorporated (NYSE:SNA) 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 Snap-on Incorporated (NYSE:SNA) and shared Ariel Focus Fund's views on the company in the previous quarter. 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.