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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 2025 Q1 Investor Letter | Buyside Digest

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

Primary Source Intelligence • Q1 2025 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+2.52%

YTD+2.52%

Annualized+9.23%

Positioning StanceConstructive

Market CapLarge Cap

GeographyUS

Digest Analysis

Quick Take

"Hotchkis & Wiley's Large Cap Value fund outperformed in Q1 2025 driven by strong healthcare stock selection. The portfolio trades at 8x normal earnings versus 17x for the Russell 1000 Value benchmark."

Executive Summary

The Hotchkis & Wiley Large Cap Fundamental Value Fund outperformed the Russell 1000 Value Index in Q1 2025, returning 2.52% versus 2.14% for the benchmark. The fund benefited from strong stock selection in healthcare, which was the largest positive contributor to relative performance. The managers increased healthcare exposure meaningfully after identifying attractive risk-adjusted opportunities as the sector underperformed. The portfolio trades at 8x normal earnings versus 17x for the Russell 1000 Value, providing an attractive valuation advantage. Key contributors included CVS Health, AIG, and Elevance Health, while detractors included Olin Corp, Magna International, and Alphabet. The fund maintains a quality focus with steady Fundamental Risk Ratings and consistent mid-to-high teens return on equity. The managers draw parallels to the early 2000s market environment and believe value dislocations across market segments will lead to further correction and normalization, creating a favorable environment for their fundamental value approach.

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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

75%

CautiousHigh

High Conviction (75%)

High conviction evidenced by meaningful increases in healthcare exposure, specific stock selections with detailed rationale, and clear articulation of investment thesis. The manager demonstrates strong belief in their value approach and provides concrete examples of positioning changes.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The manager expresses cautious optimism about market conditions, drawing parallels to early 2000s and expecting value dislocations to correct. While acknowledging current market challenges including policy uncertainty and elevated valuations, they believe fundamentals will eventually drive performance in their favor.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

The fund demonstrates moderate risk appetite by increasing healthcare exposure meaningfully and maintaining quality standards. The portfolio exhibits balanced positioning with steady Fundamental Risk Ratings and consistent return metrics, suggesting selective but confident capital deployment.

Capital Deployment

40%

De-riskingDeploying

Net Neutral (40%)

Moderate deployment indicated by meaningful increases in healthcare sector exposure (5 percentage points over past year, 8 over past 2 years) and selective stock additions. While not aggressive, the fund shows active capital allocation toward identified opportunities.

Forward Guidance

50%

CautiousExpansionary

Neutral (50%)

The manager provides positive forward guidance, stating that the current environment 'would be very conducive to our investment approach' and expecting fundamentals to drive markets. They anticipate growth stocks to reflect more realistic projections while value opportunities become better appreciated.

Language Signal

30%

BearishBullish

Bearish (30%)

Language shows moderate optimism with terms like 'attractive valuation,' 'favorable environment,' and 'conducive to our approach.' However, this is balanced by acknowledgment of risks, policy uncertainty, and market challenges, resulting in measured rather than exuberant tone.

Perceived Risk

60%

Low RiskElevated

Moderate Risk (60%)

Moderate risk perception with acknowledgment of policy uncertainty, tariff concerns, elevated market valuations (Russell 1000 Growth at 40% premium to historical average), and sector-specific headwinds. Manager identifies multiple risk factors while maintaining investment discipline.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

Good opportunity density perceived, particularly in healthcare where 'numerous attractive risk-adjusted valuation opportunities' were identified. The manager sees value dislocations across market segments and believes the environment is becoming more favorable for their approach.

Time Horizon

80%

Short-TermLong-Term

Decade+ (80%)

Long-term orientation evidenced by references to Ben Graham's long-term weighing machine concept, multi-year positioning changes, and focus on fundamental earnings power rather than short-term catalysts. The approach emphasizes patient capital deployment and fundamental value realization.