Artisan Partners, an investment management company, released its “Artisan Value Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The growth stock trend that had driven US stocks up since late 2022 collapsed in Q1. The fund’s Investor Class ARTLX, Advisor Class APDLX, and Institutional Class APHLX returned 2.23%, 2.24%, and 2.31%, respectively, in the first quarter compared to a 2.14% return for the Russell 1000® Value Index. The relative performance was positively influenced by its sector allocation, which included lower-than-benchmark weightings in information technology and industrials, as well as a higher allocation in consumer staples. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2025.
In its first-quarter 2025 investor letter, Artisan Value Fund highlighted stocks such as Nestlé S.A. (OTC:NSRGY). Headquartered in Vevey, Switzerland, Nestlé S.A. (OTC:NSRGY) is a food and beverage company. The one-month return of Nestlé S.A. (OTC:NSRGY) was 0.59%, and its shares gained 0.12% of their value over the last 52 weeks. On May 29, 2025, Nestlé S.A. (OTC:NSRGY) stock closed at $106.43 per share with a market capitalization of $268.2 billion.
Artisan Value Fund stated the following regarding Nestlé S.A. (OTC:NSRGY) in its Q1 2025 investor letter:
“We made one new purchase this quarter, adding Nestlé S.A. (OTC:NSRGY), the world’s largest food and beverage company. Nestlé has a diverse portfolio, with over 30 “billionaire” brands—those generating CHF 1 billion— including Nescafé, Nespresso, Purina, Gerber and Kit Kat. The largest drivers are coffee, pet care and nutrition—accounting for ~64% of sales and ~65% of operating profit. Approximately 70% of sales are in No. 1 or No. 2 market positions. Nestlé is also highly diversified geographically, with a global footprint of 188 countries (60% developed markets, 40% emerging markets). The stock has been out of favor for a combination of reasons, some of which are company specific. During COVID, certain product categories saw rapid growth, and Nestlé raised prices to cover surging raw material costs. During that period, growth was entirely driven by price. Eventually, volumes decelerated, and consumers pushed back on pricing. The stock peaked in January 2022. The stock’s valuation has fallen meaningfully in the ensuing three years, nearing trough valuation multiples. Other growth headwinds impacting the consumer-packaged goods (CPG) sector are slowing population growth, especially in developed markets, competition from private label and niche brands, and the advent of GLP-1 weight loss drugs, which curb appetites for sugary foods. In August, the board appointed Laurent Freixe as the new CEO. His immediate focus is on organic growth through innovation and increased advertising and promotional spend to drive free cash flow generation. Innovation took a backseat during the pandemic, as was common among CPG businesses, and that likely hindered growth post the pandemic. Margins are expected to remain under pressure as the company invests to reignite growth over the next 12–18 months, as well as due to higher commodity prices ahead of lagged future price increases. We believe these challenges are already well recognized by the market and largely priced into the stock. As we wait for new management to turnaround Nestlé’s growth, the company continues to generate solid free cash flow and pay a solid dividend, yielding ~3.4%.”
A filled shopping cart with popular food and beverage items.
Nestlé S.A. (OTC:NSRGY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 4 hedge fund portfolios held Nestlé S.A. (OTC:NSRGY) at the end of the first quarter, which was 4 in the previous quarter. While we acknowledge the potential of Nestlé S.A. (OTC:NSRGY) 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.
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Disclosure: None. This article is originally published at Insider Monkey.
