Soumya Eswaran
3 min read
In This Article:
Hotchkis & Wiley, an investment management company, released its “Hotchkis & Wiley Mid-Cap Value Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The Hotchkis & Wiley Mid-Cap Value Fund returned -5.63% in the first quarter, underperforming the Russell Midcap Value Index’s -2.11% return. US mid-cap stocks surged post-Presidential elections due to potential benefits of deregulation, lower corporate taxes, and accelerated growth. However, Q1 2025 saw a decline due to tariffs, high inflation, and weak macroeconomic factors, causing the Russell Midcap Index to decline by -3.4% and the Russell Midcap Value Index by -2.1% vs. a decline of -7.1% for the Russell Midcap Growth Index. For more information on the fund’s best picks in 2025, please check its top five holdings.
In its first-quarter 2025 investor letter, Hotchkis & Wiley Mid-Cap Value Fund highlighted stocks such as CVS Health Corporation (NYSE:CVS). CVS Health Corporation (NYSE:CVS) is a US-based health solutions provider. The one-month return of CVS Health Corporation (NYSE:CVS) was -4.05%, and its shares gained 8.94% of their value over the last 52 weeks. On May 16, 2025, CVS Health Corporation (NYSE:CVS) stock closed at $62.53 per share with a market capitalization of $79.1 billion.
Hotchkis & Wiley Mid-Cap Value Fund stated the following regarding CVS Health Corporation (NYSE:CVS) in its Q1 2025 investor letter:
"CVS Health Corporation (NYSE:CVS) is a diversified healthcare company operating as a Pharmacy Benefits Manager (PBM), health insurer, and retail stores and pharmacies. In January, CVS and other health insurers with large Medicare Advantage plans rose after the Centers for Medicare & Medicaid Services (CMS) published better-than-expected reimbursement rates for 2026. CVS maintained that momentum in February by reporting expected fourth[1]quarter results. It then reported decent quarterly results. The PBM segment and physical stores were in line with expectations. However, Aetna incurred losses across multiple lines of business, driven by Medicare Advantage and the Exchanges. Despite this, the losses in the health insurance segment were less severe than anticipated, leading to a positive market reaction."
A row of shelves in a retail pharmacy, demonstrating the variety of drugs and over-the-counter products.
CVS Health Corporation (NYSE:CVS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 74 hedge fund portfolios held CVS Health Corporation (NYSE:CVS) at the end of the fourth quarter, compared to 63 in the third quarter. In the first quarter of 2025, CVS Health Corporation (NYSE:CVS) reported revenue of $94.59 billion, representing 7% year-over-year growth. While we acknowledge the potential of CVS Health Corporation (NYSE:CVS) 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 undervalued AI stock set for massive gains.
