ACGLN - FMI Funds Q1 2024 Shareholder Letter

2024-05-17 11:50:00 ET

Summary

• Fiduciary Management, Inc. is an independent money management firm. FMI’s equity investing strategies apply a value discipline, with a focused approach firmly rooted in fundamental research.
• The stock market has seen strong growth in the first quarter, led by growth stocks, but the fundamentals do not support the current levels of exuberance.
• FMI's Common Stock Fund outperformed the Russell 2000 Index, driven by performance in the finance, producer manufacturing, and distribution services sectors.
• The S&P 500's exceptional run of outperformance may not be sustainable, as valuations are high and profit margins are at a 40-year high.

Dear Fellow Shareholders:

Last year’s stock market momentum carried over into the first quarter, with growth stocks leading the charge (once again) across market caps and geographies. Investors seem complacent, as the fundamentals do not appear to justify the current levels of exuberance. Germany, the UK, and Japan are all either in – or teetering on the verge of – a recession. China’s growth is coming under significant pressure, global trade is slowing, geopolitical risks remain elevated, and debt levels continue to march higher. The U.S. economy has been resilient but is expected to decelerate in 2024. The S&P 500 ( SP500 , SPX ) has taken on a life of its own, with an incredible concentration in mega cap technology, leaving most other asset classes in the dust in recent years. Is the S&P 500’s exceptional run of outperformance sustainable? Consider us skeptical....

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