River Road Asset Management, an investment management company released its “River Road Large Cap Value Select Fund” Q4 2024 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, AMG River Road Large Cap Value Select Fund returned 0.43% compared to (1.98%) return for the Russell 1000® Value Index. For the year 2024, the fund returned 24.59% significantly outperforming Index return of 14.37%. Stocks rallied in November after a Republican victory but declined sharply following hawkish Fed comments. Shorter duration stocks, including small caps and value, lost most of their post-election gains by the end of December. For more information on the fund’s best picks in 2024, please check its top five holdings.

In its fourth quarter 2024 investor letter, River Road Large Cap Value Select Fund 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 of Lululemon Athletica Inc. (NASDAQ:LULU) was -6.59%, and its shares lost 12.57% of their value over the last 52 weeks. On March 27, 2025, Lululemon Athletica Inc. (NASDAQ:LULU) stock closed at $341.53 per share with a market capitalization of $41.593 billion.

River Road Large Cap Value Select Fund stated the following regarding Lululemon Athletica Inc. (NASDAQ:LULU) in its Q4 2024 investor letter:

"Lululemon Athletica Inc. (NASDAQ:LULU) was our largest new purchase last quarter (Q3) and the holding with the highest contribution to active return in the portfolio during Q4. As the pioneer of the “athleisure” industry, LULU has secured its position as North America’s leading athletic apparel retailer through its innovative technical fabrics and controlled distribution model. With 90% of sales through company-owned channels, LULU maintains exceptional brand integrity and pricing power. We believe this strategy has delivered outstanding results: 24% annual sales growth over the past five years and sustained 40%+ returns on invested capital. The company’s growth trajectory remains compelling, driven by rapid international expansion (~40% compound annual growth rate [CAGR] since 2019) and a thriving men’s business (~30% CAGR since 2019), while its robust balance sheet and disciplined capital allocation reinforce long-term value creation potential.

lululemon’s stock rebounded strongly in Q4 after the company reported robust performance metrics, including record Black Friday e-commerce traffic and the highest operating margin in a decade at 20.5%. While U.S. growth remained flat, the company’s premium positioning and controlled distribution strategy (avoiding broad sales events) drove adjusted gross margins up 40 bps to 58.5%, significantly outperforming guidance. International momentum continues to impress, with China growing 36% and Rest of World up 23%, while the company’s opportunistic capital return program, including $409MM in share repurchases during the quarter, further supported investor confidence in management’s execution and long-term value creation strategy. We trimmed the position as it approached our assessed value."

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.

We covered Lululemon Athletica Inc. (NASDAQ:LULU) in another article, where we shared Diamond Hill Large Cap Strategy's views on the company. 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.