O’keefe Stevens Advisory, an investment advisory firm, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In a volatile first quarter, equity price movements exceeded downside underwriting assumptions. The firm is cautious in assessing downside risk, as disappointing earnings often lack immediate price support. The market seems to believe no valuation is too low when earnings miss expectations, whether the issues are temporary or structural. In addition, please check the top 5 holdings of the strategy to know its best pick in 2025.
In its first-quarter 2025 investor letter, O’keefe Stevens Advisory highlighted stocks such as Donnelley Financial Solutions, Inc. (NYSE:DFIN). Donnelley Financial Solutions, Inc. (NYSE:DFIN) is a technology company that offers innovative software and technology-enabled financial regulatory and compliance solutions. The one-month return of Donnelley Financial Solutions, Inc. (NYSE:DFIN) was 25.76%, and its shares lost 20.43% of their value over the last 52 weeks. On May 1, 2025, Donnelley Financial Solutions, Inc. (NYSE:DFIN) stock closed at $50.68 per share with a market capitalization of $1.401 billion.
O’keefe Stevens Advisory stated the following regarding Donnelley Financial Solutions, Inc. (NYSE:DFIN) in its Q1 2025 investor letter:
“In our portfolio, Donnelley Financial Solutions, Inc. (NYSE:DFIN) recently declined approximately 20% following disappointing Q4 results and soft guidance for Q1. The miss was driven primarily by a steeper than-expected decline in their legacy paper and printing segment, as well as continued weakness in capital markets activity—particularly IPOs and M&A. However, our investment thesis centers on the company’s recurring software solutions segment, which grew organically by 11.6% in Q4. This growth signals underlying strength in the core business.
We believe the market has misread this temporary weakness as a permanent impairment, creating a compelling mispricing. 2025 forward estimates were revised down approximately 9%, and 2026 down 7%—the stock’s decline implies a permanent reduction of more than 10% in its terminal valuation multiple. This seems unjustifiably pessimistic. Should any stock, regardless of valuation, balance sheet quality, or industry context, be expected to decline 20%+ on a single earnings miss? The rise of multi-manager platforms engaging in event-driven, leveraged strategies may partially explain the growing severity of these reactions.”
A woman in a suit and tie on a platform, speaking to shareholders about the latest contract analysis and SEC compliance solutions.
Donnelley Financial Solutions, Inc. (NYSE:DFIN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Donnelley Financial Solutions, Inc. (NYSE:DFIN) at the end of the fourth quarter, compared to 23 in the third quarter. Donnelley Financial Solutions, Inc. (NYSE:DFIN) reported consolidated net sales of $201.1 million in the first quarter of 2025, down 1.1% from the first quarter of 2024. While we acknowledge the potential of Donnelley Financial Solutions, Inc. (NYSE:DFIN) 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 Donnelley Financial Solutions, Inc. (NYSE:DFIN) and shared O’keefe Stevens Advisory’s views on the company in the previous quarter. 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.