River Road Asset Management, an investment management company released its “River Road Small-Mid Cap Value Fund” Q4 2024 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, AMG River Road Small Cap Value Fund (Class N) returned 3.67% compared to -0.26% returns for the Russell 2500TM Value Index. For the year 2024, the fund returned 12.46% compared to the Index return of 10.98%. 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 Small-Mid Cap Value Fund emphasized stocks such as BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ). BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) operates warehouse clubs that provide groceries, general merchandise, gasoline and other ancillary services, coupon books, and promotions. The one-month return BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) was 14.90%, and its shares gained 54.65% of their value over the last 52 weeks. On April 1, 2025, BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) stock closed at $114.88 per share with a market capitalization of $15.134 billion.

River Road Small-Mid Cap Value Fund stated the following regarding BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) in its Q4 2024 investor letter:

"Another bottom contributor during the quarter was BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), a warehouse club operator with 244 clubs and 175 gas stations across 20 states on the United States East Coast. BJ reported Q2 results that exceeded expectations, but guided to marginally lower merchandise margin for the full year as the company continues to invest in a better value proposition for its members. Comparable-store sales (excluding fuel) increased 2.4% driven by 4% traffic growth and positive same-store sales across all categories. Gasoline sales, a key traffic driver for BJ, outperformed the broader United States market, with same-store gallons growing by 5%, in contrast to a low single-digit decline industry-wide. Groceries and perishables sales were up 3%, also indicating market share gains over traditional grocers. General merchandise sales were up 1% year-over-year as management has renewed focus on better assortment and better value. BJ is also increasing investments by improving perishables assortments like meat and produce. The investments in general merchandise will lead to a flat year-over-year merchandise margin in 2024 compared to 20 bps improvement expected at the beginning of the year. These investments should drive traffic as well as incremental membership fee growth, the most important metric for the warehouse club model. To that end, membership fee income rose 9.1% in the quarter. Additionally, higher tier membership penetration increased to 39%, up 1% sequentially, with double-digit growth in the One+ tier ($110 annual fee, holding a co-branded Capital One card), the highest tier membership, which has the greatest lifetime value. BJ is on track to open 11 more clubs by the end of 2024 and an additional 10-12 new clubs in 2025. We took no action on the position."

A customer happily filling up their tank at the Wholesale Club's gasoline station.

BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) at the end of the fourth quarter compared to 28 in the third quarter. While we acknowledge the potential of BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) 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 BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) in another article, where we shared the list of best department store 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.