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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Hotchkis & Wiley Large Cap Fundamental Value 2024 Q4 Investor Letter | Buyside Digest

Back to Fund Profile (Hotchkis & Wiley Large Cap Fundamental Value)

Primary Source Intelligence • Q4 2024 Letter Analysis

Hotchkis & Wiley Large Cap Fundamental Value Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Hotchkis & Wiley Large Cap Fundamental Value. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD-91%

YTD+12.81%

Annualized+9.22%

Positioning StanceConstructive

Market CapLarge Cap

GeographyUS

Digest Analysis

Quick Take

"Value fund underperformed in Q4 as growth continued dominating, but maintains disciplined approach with portfolio trading near historical averages despite expensive broader market. Trimmed outperforming financials while adding defensive exposure."

Executive Summary

The Hotchkis & Wiley Large Cap Fundamental Value Fund delivered a -0.91% return in Q4 2024, bringing full-year performance to 12.81%, underperforming the Russell 1000 Value Index's 14.37% return. The fund maintains a disciplined value approach in an expensive market, with the S&P 500 trading at 25x forward earnings in the 94th percentile historically. Despite challenging conditions for value investing, with growth outperforming value by 63 percentage points over two years, the fund's portfolio trades near long-term average valuations through active stock selection. The portfolio maintains 91% active share versus the S&P 500. Financials remains the largest sector weight despite significant trimming, while the fund increased exposure to defensive sectors including healthcare, utilities, and consumer staples. Key contributors included F5 and General Motors, while healthcare names Elevance Health and CVS Health detracted. The fund continues finding selective opportunities while remaining patient and focused on valuation relative to fundamental risks.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

68%

CautiousHigh

Moderate (68%)

The fund demonstrates moderate-high conviction through concentrated top holdings (top 10 represent significant portfolio weight), specific position sizing discussions, and detailed individual stock theses. However, the diversified approach across sectors and emphasis on selectivity prevents a higher score.

Growth Outlook

38%

BearishBullish

Neutral (38%)

The manager expresses caution about elevated market valuations, noting the S&P 500 trades at 94th percentile levels historically and finding it difficult to rationalize these valuations. However, they find solace in several factors including improved ROE and shareholder returns, preventing a more negative score.

Risk Appetite

0%

DefensiveAggressive

Defensive (0%)

The fund maintains balanced positioning, trimming outperforming financials while adding to defensive sectors. The portfolio remains appropriately diversified across market segments and sectors, showing neither aggressive risk-taking nor defensive positioning.

Capital Deployment

43%

De-riskingDeploying

Net Neutral (43%)

The fund engaged in rotation activity, trimming outperforming financials while adding to defensive sectors like healthcare, utilities, and consumer staples. This represents portfolio rebalancing rather than net deployment or de-risking.

Forward Guidance

0%

CautiousExpansionary

Cautious (0%)

The manager states they remain patient, long-term investors and continue to find interesting opportunities, but emphasizes selectivity and patience rather than aggressive deployment or defensive positioning.

Language Signal

38%

BearishBullish

Balanced (38%)

Language includes more cautionary terms like elevated valuations, challenging market, guarded about prospects, and difficult to rationalize, balanced against finding opportunities and attractive ideas, resulting in a mildly negative tone.

Perceived Risk

65%

Low RiskElevated

Elevated Risk (65%)

The manager identifies specific risks including elevated market valuations at 94th percentile levels and significant growth outperformance creating challenging conditions for value investing. Risk discussion is meaningful but not alarmist.

Opportunity Density

45%

ScarceAbundant

Selective (45%)

The manager acknowledges that opportunities have become more selective and the market is challenging, but continues to find interesting risk/return opportunities, particularly in defensive sectors and specific value situations.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The fund explicitly describes itself as patient, long-term investors focused on fundamental value. The approach emphasizes holding through volatility and focusing on long-term fundamentals rather than near-term catalysts, indicating a multi-year investment horizon.