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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"The Hotchkis & Wiley Mid-Cap Value Fund outperformed its benchmark in Q4 2025, supported by strong bank selection. While the managers warn of rich valuations in passive indices, they see immense value in their active holdings, which trade at just 11x forward earnings."
In the fourth quarter of 2025, the Hotchkis & Wiley Mid-Cap Value Fund outperformed the Russell Midcap Value Index with a 2.39% return vs 1.42%, led by strong stock selection in financials (regional and trust banks) and underweight exposure to real estate. For the full year, however, the fund underperformed due to weak stock selection in energy. The managers caution that passive mid-cap indices have historically high valuations (21x forward P/E, 81st percentile), leaving little margin of safety. In contrast, they highlight the fund's active value strategy, with the portfolio trading at 11x forward and 6x normal earnings. Notable overweights include auto suppliers, E&P companies, banks, and health insurers. Key positive individual contributors included Ericsson, Herbalife, and Baytex Energy, while Kosmos Energy, Adient, and F5 detracted due to temporary headwinds that the managers view as transient buying opportunities.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High-conviction positioning: The Hotchkis & Wiley Mid-Cap Value Fund outperformed its benchmark in Q4 2025, supported by strong bank selection. While the managers warn of rich valuations in passive indices, th...
Growth Outlook
Market outlook remains moderate conviction: The Hotchkis & Wiley Mid-Cap Value Fund outperformed its benchmark in Q4 2025, supported by strong bank selection. While the managers warn of rich valuations in passive indices, th...
Risk Appetite
Risk appetite posture is moderate conviction: The Hotchkis & Wiley Mid-Cap Value Fund outperformed its benchmark in Q4 2025, supported by strong bank selection. While the managers warn of rich valuations in passive indices, th...
Capital Deployment
Manager actively deployed capital into high-conviction opportunities. The Hotchkis & Wiley Mid-Cap Value Fund outperformed its benchmark in Q4 2025, supported by strong bank selection. While the managers warn of rich valuations in passive indices, th...
Forward Guidance
Forward guidance signal: The Hotchkis & Wiley Mid-Cap Value Fund outperformed its benchmark in Q4 2025, supported by strong bank selection. While the managers warn of rich valuations in passive indices, th...
Language Signal
Tone analysis indicates above average conviction language: The Hotchkis & Wiley Mid-Cap Value Fund outperformed its benchmark in Q4 2025, supported by strong bank selection. While the managers warn of rich valuations in passive indices, th...
Perceived Risk
Perceived risk level is evaluated as above average conviction. The Hotchkis & Wiley Mid-Cap Value Fund outperformed its benchmark in Q4 2025, supported by strong bank selection. While the managers warn of rich valuations in passive indices, th...
Opportunity Density
Opportunity density index indicates high conviction actionable entry points. The Hotchkis & Wiley Mid-Cap Value Fund outperformed its benchmark in Q4 2025, supported by strong bank selection. While the managers warn of rich valuations in passive indices, th...
Time Horizon
Investment time horizon reflects a high conviction orientation. The Hotchkis & Wiley Mid-Cap Value Fund outperformed its benchmark in Q4 2025, supported by strong bank selection. While the managers warn of rich valuations in passive indices, th...
