LGI Homes (LGIH) Slid Amid Decline in Home Closings

Yahoo

26-06-2025

River Road Asset Management, an investment management company, released its 'River Road Small Cap Value Fund' Q1 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, AMG River Road Small Cap Value Fund (Class N) returned -3.94% compared to -7.74% returns for the Russell 2000 Value Index. The fund returned 1.30% for the one year ended March 31, 2025, compared to the index return of -3.12%. Stocks declined in the first quarter due to diminishing growth expectations and uncertainty surrounding trade policies, which crumbled the post-election increase in business, consumer, and investor confidence. The remaining gains were subsequently erased following 'Liberation Day.' For more information on the fund's best picks in 2025, please check its top five holdings.
In its first-quarter 2025 investor letter, River Road Small Cap Value Fund highlighted stocks such as LGI Homes, Inc. (NASDAQ:LGIH). LGI Homes, Inc. (NASDAQ:LGIH) is a US-based home builder that engages in the design, construction, and sale of homes. The one-month return of LGI Homes, Inc. (NASDAQ:LGIH) was -2.76%, and its shares lost 44.71% of their value over the last 52 weeks. On June 25, 2025, LGI Homes, Inc. (NASDAQ:LGIH) stock closed at $49.30 per share, with a market capitalization of $1.154 billion.
River Road Small Cap Value Fund stated the following regarding LGI Homes, Inc. (NASDAQ:LGIH) in its Q1 2025 investor letter:
"Another poor performer was LGI Homes, Inc. (NASDAQ:LGIH), the 15th largest homebuilder in the U.S. specializing in entry-level homes for first time buyers. LGIH reported Q4 2024 results below expectations due to ongoing affordability challenges and elevated mortgage rates. Home sales revenue decreased -8.4% year over year, driven by a decline in home closings (-12.8% year over year) while the average sales price (ASP) rose 5.1% year over year to $364k."
A worker hammering a nail into the frame of a single-family home under construction.
LGI Homes, Inc. (NASDAQ:LGIH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held LGI Homes, Inc. (NASDAQ:LGIH) at the end of the first quarter, which was 21 in the previous quarter. While we acknowledge the potential of LGI Homes, Inc. (NASDAQ:LGIH) 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 another article, we covered LGI Homes, Inc. (NASDAQ:LGIH) and shared River Road Small Cap Value Fund's views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of PGNY as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.