NVST - Ariel Investments Small/Mid Cap Value Q1 2024 Commentary

2024-06-25 12:08:00 ET

Summary

• Ariel Investments, LLC is a global value-based asset management firm founded four decades ago in 1983. Ariel serves individual and institutional investors through five no-load mutual funds and eleven separate account strategies.
• The Ariel Small/Mid Cap Value Composite advanced +7.53% gross of fees in the quarter, outperforming both the Russell 2500 Value Index and Russell 2500 Index, which returned +6.07% and +6.92%, respectively.
• Lazard Ltd. advanced in the period following solid top- and bottom-line results, highlighted by momentum in the advisory business, improving financing markets and early signs of progress on previously articulated cost-savings initiatives.
• We are now evaluating the upside return potential with shares trading at a significant discount to our estimate of private market value.

U.S. indices continued to exceed expectations in the first quarter. Investor enthusiasm around artificial intelligence ((AI)), resilient corporate earnings growth, falling inflation and expectations for interest rate cuts this year drove a broad-based rally. While momentum was the largest driver of performance across size and style, all sectors in the S&P 500, except real estate, posted gains. Fears of a recession have been replaced with optimism and bullish market sentiment. Such turns in market psychology and economic forecasts highlight the challenges of market timing and the importance of taking a long-term view. Although exuberance, particularly for AI-themed mega-cap stocks may eventually prove to be excessive, the patient investor knows stock prices trade on fundamentals. Against this backdrop, the Ariel Small/Mid Cap Value Composite advanced +7.53% gross of fees (+7.27% net of fees) in the quarter, outperforming both the Russell 2500 Value Index and Russell 2500 Index, which returned +6.07% and +6.92%, respectively....

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