TCW Relative Value Mid Cap Fund Sold Academy Sports and Outdoors (ASO) Due to Thesis Misalignment

TCW funds, an investment management company, released its “TCW Relative Value Mid Cap Fundsecond-quarter 2025 investor letter. A copy of the letter can be downloaded here. The second quarter started with a sharp decline driven by the Liberation Day tariffs announcement by President Trump, but a 90-day pause on certain tariffs led to a strong recovery, propelling the S&P 500 and Nasdaq to new highs. U.S. equities continued to rise in May and June, supported by better-than-expected corporate results and positive jobs reports. Against this backdrop, the fund (I share) returned 7.37% in the quarter compared to 5.35% for the Russell Midcap® Value Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, TCW Relative Value Mid Cap Fund highlighted stocks such as Academy Sports and Outdoors, Inc. (NASDAQ:ASO). Academy Sports and Outdoors, Inc. (NASDAQ:ASO) is a US-based sporting goods and outdoor recreational retailer. The one-month return of Academy Sports and Outdoors, Inc. (NASDAQ:ASO) was 5.86%, and its shares lost 3.53% of their value over the last 52 weeks. On October 2, 2025, Academy Sports and Outdoors, Inc. (NASDAQ:ASO) stock closed at $52.97 per share, with a market capitalization of $3.529 billion.

TCW Relative Value Mid Cap Fund stated the following regarding Academy Sports and Outdoors, Inc. (NASDAQ:ASO) in its second quarter 2025 investor letter:

Academy Sports and Outdoors, Inc. (NASDAQ:ASO), founded in 1938 and headquartered in Katy, TX, is a sporting goods and outdoor recreation retailer that operates 298 retail stores located primarily in the southern United States. Strategic supplier Nike† accounts for approximately 11% of revenue. At exit, the stock had a $2.5 billion market capitalization and met all valuation factors save for dividend yield of 1.2%. The company is positioned to serve the lower-to-middle income consumer base but given the tariffs increased costs on a pressured consumer, the return to more sustainable comps will likely take more time than anticipated. In addition, although the company is launching new Nike product, access to the desirable Hoka and ON Running product remains elusive. Altogether, the recovery thesis is hampered and skews the risk to the downside. As such, the position was eliminated.

Academy Sports & Outdoors, Inc. (ASO): Among Billionaire David Harding’s Stock Picks with Huge Upside Potential

Academy Sports and Outdoors, Inc. (NASDAQ:ASO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 35 hedge fund portfolios held Academy Sports and Outdoors, Inc. (NASDAQ:ASO) at the end of the second quarter, up from 30 in the previous quarter. Academy Sports and Outdoors, Inc. (NASDAQ:ASO) reported net sales approximately $1.6 billion in Q2 2025, representing an increase of 3.3% with a comp increase of 0.2%. While we acknowledge the risk and potential of Academy Sports and Outdoors, Inc. (NASDAQ:ASO) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Academy Sports and Outdoors, Inc. (NASDAQ:ASO) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Academy Sports and Outdoors, Inc. (NASDAQ:ASO) and shared a bullish thesis on the company. In addition, please check out our hedge fund investor letters Q2 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.