Here’s What Dragged Lululemon Athletica (LULU) in Q1

Diamond Hill Capital, an investment management company, released its “Large Cap Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. Markets exhibited a mixed performance in Q1 as the new presidential administration generated significant buzz with a flurry of actions, leaving investors uncertain about the future direction. The portfolio trailed the Russell 1000 Value Index benchmark in Q1. The strategy returned 1.36% (net) vs 2.14% returns for the index. To get an idea of the fund’s best choices for 2025, check out its top 5 positions.

In its first-quarter 2025 investor letter, Diamond Hill Large Cap Fund highlighted stocks such as Athletica Inc. (NASDAQ:LULU). Lululemon Athletica Inc. (NASDAQ:LULU) designs, distributes, and retails athletic apparel, footwear, and accessories. The one-month return of Lululemon Athletica Inc. (NASDAQ:LULU) was 7.18%, and its shares lost 20.74% of their value over the last 52 weeks. On May 9, 2025, Lululemon Athletica Inc. (NASDAQ:LULU) stock closed at $279.77 per share with a market capitalization of $33.616 billion.

Diamond Hill Large Cap Fund stated the following regarding Lululemon athletica inc. (NASDAQ:LULU) in its Q1 2025 investor letter:

“Other bottom contributors in Q1 included Lululemon athletica inc. (NASDAQ:LULU), General Motors and Capital One. Shares of athletic apparel manufacturer lululemon were pressured amid ongoing concerns about potential brand saturation in the Americas, its largest market. However, we believe the company is operating well and is positioned to improve US sales performance while continuing to grow international sales — factors that make the current valuation compelling, in our view.”

Jim Cramer on Lululemon (LULU): “Frantically Trying to Bottom... Go Ahead, Start a Small Position”

A store employee in an athletic apparel store restocking merchandise.

Lululemon Athletica Inc. (NASDAQ:LULU) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held Lululemon Athletica Inc. (NASDAQ:LULU) at the end of the fourth quarter which was 45 in the previous quarter. Lululemon Athletica Inc.’s (NASDAQ:LULU) fourth-quarter total net revenue increased 13% or 14% in constant currency to $3.6 billion. While we acknowledge the potential of Lululemon Athletica Inc. (NASDAQ:LULU) 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 cheapest AI stock.

In another article, we covered Lululemon athletica Inc. (NASDAQ:LULU) and shared the list of stocks Jim Cramer recently discussed. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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