Here’s Why Regal Rexnord Corporation (RRX) Fell 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 Regal Rexnord Corporation (NYSE:RRX). Regal Rexnord Corporation (NYSE:RRX) is a global manufacturer of industrial powertrain solutions, power transmission components, electric motors and electronic controls, air-moving products, and specialty electrical components and systems.  The one-month return of Regal Rexnord Corporation (NYSE:RRX) was 33.59%, and its shares lost 17.29% of their value over the last 52 weeks. On May 9, 2025, Regal Rexnord Corporation (NYSE:RRX) stock closed at $134.22 per share with a market capitalization of $8.904 billion.

Diamond Hill Large Cap Fund stated the following regarding Regal Rexnord Corporation (NYSE:RRX) in its Q1 2025 investor letter:

“Among our bottom Q1 individual contributors were Regal Rexnord Corporation (NYSE:RRX) and Target. Power transmission components manufacturer Regal Rexnord faced pressure amid growing tariff-related concerns. Generally, its organic growth has held up better than peers’, and though its leverage is somewhat elevated, merger synergies and debt paydown rates are beating expectations — factors which should position it well relative to competitors. We believe the recent weakness has been an overreaction and maintain our conviction in our thesis.”

Regal Rexnord Corporation (RRX): Among Billionaire Ken Fisher’s Industrial Stock Picks with Huge Upside Potential

A technician inspecting a specialized industrial machinery in an engineering lab.

Regal Rexnord Corporation (NYSE:RRX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Regal Rexnord Corporation (NYSE:RRX) at the end of the fourth quarter which was 30 in the previous quarter. Regal Rexnord Corporation’s (NYSE:RRX) organic sales increased by 0.7% year-over-year basis (see the details here). While we acknowledge the potential of Regal Rexnord Corporation (NYSE:RRX) 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 Regal Rexnord Corporation (NYSE:RRX) and shared Billionaire Ken Fisher’s industrial stock picks with huge upside potential. 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.