Ecovyst (ECVT) Traded Lower in Q1. Here’s Why

Hotchkis & Wiley, an investment management company, released its “Hotchkis & Wiley Value Opportunities Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q1 2025, the Russell 3000 Index declined -4.7%, driven by the mega-cap growth stocks. The Magnificent Seven represented over 28% of the Russell 3000 Index in the quarter, collectively experiencing a decline of 14%. The value outperformed its growth counterpart in the first quarter. The fund returned 2.27% in the quarter, exceeding the Russell 3000 Value Index’s 1.64% return. 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 Value Opportunities Fund highlighted stocks such as Ecovyst Inc. (NYSE:ECVT). Ecovyst Inc. (NYSE:ECVT) provides specialty catalysts and services. The one-month return of Ecovyst Inc. (NYSE:ECVT) was -4.04%, and its shares lost 15.56% of their value over the last 52 weeks. On July 1, 2025, Ecovyst Inc. (NYSE:ECVT) stock closed at $7.60 per share, with a market capitalization of $892.248 million.

Hotchkis & Wiley Value Opportunities Fund stated the following regarding Ecovyst Inc. (NYSE:ECVT) in its Q1 2025 investor letter:

“Ecovyst Inc. (NYSE:ECVT) is a U.S. based catalyst producer that generates two thirds of sales from the ecoservices segment while one third of sales comes from catalyst technologies. Ecovyst reported an OK quarter, with strength in regeneration services offsetting timing related weakness in hydrocracking catalysts. FY 2025 EBITDA (Earnings Before Interest and Taxation, Depreciation and Amortization) is expected to be ~$248m at the midpoint (4% growth year over-year), below 2025 consensus estimates of $260m and our estimate of normal earnings. ECVT has pruned its once sprawling portfolio and has used proceeds to pay down debt and issue special dividends. ECVT’s two remaining businesses, catalysts and ecoservices, grow organically ~MSD (mid-single digit) and earn sustainable, mid-30s EBITDA margins.”

A view of a large petro-chemical plant and its complex equipment.

Ecovyst Inc. (NYSE:ECVT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held Ecovyst Inc. (NYSE:ECVT) at the end of the first quarter, which was 24 in the previous quarter. While we acknowledge the potential of Ecovyst Inc. (NYSE:ECVT) 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.

In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of ECVT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.