The London Company Large Cap Strategy Exited The Home Depot (HD) in Q1
The London Company, an investment management company, released 'The London Company Large Cap Strategy' first quarter 2025 investor letter. A copy of the letter can be downloaded here. The US equities experienced a correction in the first quarter following two years of robust performance. The portfolio returned 2.4% (2.3%, net) during the quarter compared to a 4.5% increase for the Russell 1000 Index. In addition, you can check the fund's top 5 holdings to determine its best picks for 2025.
In its first-quarter 2025 investor letter, The London Company Large Cap Strategy highlighted stocks such as The Home Depot, Inc. (NYSE:HD). The Home Depot, Inc. (NYSE:HD) is a home improvement retailer. The one-month return of The Home Depot, Inc. (NYSE:HD) was 5.50%, and its shares gained 9.72% of their value over the last 52 weeks. On May 13, 2025, The Home Depot, Inc. (NYSE:HD) stock closed at $373.60 per share with a market capitalization of $371.331 billion.
The London Company Large Cap Strategy stated the following regarding The Home Depot, Inc. (NYSE:HD) in its Q1 2025 investor letter:
"Exited: The Home Depot, Inc. (NYSE:HD) - Sale reflects a relatively high valuation (18.6x trailing EBITDA) along with a mixed outlook for consumer spending and housing activity. While the aging housing base and stable housing values are a positive for home improvement spending, we note that we already have exposure via Lowe's and didn't feel the need to own both companies."
A family selecting a wood and wire closet organization in a home improvement store.
The Home Depot, Inc. (NYSE:HD) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 88 hedge fund portfolios held The Home Depot, Inc. (NYSE:HD) at the end of the fourth quarter which was 82 in the previous quarter. While we acknowledge the potential of The Home Depot, Inc. (NYSE:HD) 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 cheapest AI stock.
In another article, we covered The Home Depot, Inc. (NYSE:HD) and shared the list of best and worst Dow stocks. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
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If the dies are not exempt, he said the extra cost for the tariff will be passed onto Team 1's customers. As for the dies Team 1 already ordered before the tariffs were applied, it already had quoted its prices to its customers so it will not raise those prices to offset the added expense. He said some companies in Michigan make dies, but they don't have enough capacity to meet all the suppliers' needs. And, as those companies get busier, they will raise their prices too. On top of that problem, Team 1 also needs a new injection molding machine, which is made in Japan. Grigowski ordered a new one even though the 24% tariff on goods coming from Japan tacks on $72,000 to its price tag. He is hoping the tariff on Japan will be lowered to 10%, bring down the bill to $30,000. It would be less of an impact, "but it's still painful," he said. Finally, because Team 1 has added new clients in recent years, it has outgrown its facilities and needs to make a 50% expansion to its plant. 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A bigger supplier's strategies Across the state in Auburn Hills, Lucerne International, which makes chassis, powertrains and body structural components for passenger cars and commercial vehicles, is a bigger supplier at the tier one and tier two levels. CEO Buchzeiger declined to provide Lucerne's annual revenue or employee count, but she has been grappling with Trump tariffs since 2018 because of Lucerne's scale and reach into Asia. Trump was threatening to boost tariffs on China to 25% back then too. So she has learned a thing or two about mitigating tariffs that she's willing to pass on to smaller suppliers to help them. "The biggest issue with the supply base, especially with paying more cash up front, is cash flow and liquidity," Buchzeiger said. "The smaller suppliers can't pay that up front … it sucks cash flow out of your organization." Buchzeiger said her company has been working to get more of its supplies from domestic providers. She shares other strategies, such as what to do when the goods clear a port, as duties are due within seven to 10 days. Sometimes, the goods "aren't even at our door yet and the tariffs are due," Buchzeiger said. To offset that problem, Lucerne signed up for a U.S. Customs and Border Protection program called Periodic Monthly Statement, Buchzeiger said. That program allows a company to pay all the tariffs on the 15th of the month. So if the parts clear the border on the 16th, the company has a full month to pay it, she said. Buchzeiger said the company is also applying to be a foreign trade zone. "That allows us to bring the goods in and sit on them and not pay duties until they clear our door because we're considered a foreign trade zone," Buchzeiger said. "It's just to save millions of dollars in our cash flow because the longer we hold onto our money, the better." Buchzeiger agrees with the president's goal that more goods should be made in America. But she said to make that happen, tariffs have to be executed strategically. The U.S. aluminum manufacturers, for example, can produce only 15% of the aluminum her company requires, she said. So Lurcerne has to import 85% of it. With the 25% tariffs on aluminum now, "you just made me uncompetitive to manufacture here. To help me manufacture here, you have to understand where raw materials come from.' Find 'a path out' Like Grigowski, Buchzeiger believes tariffs will raise new vehicle prices. Buchzeiger is on the board for MEMA and MichAuto and she said the expectation is tariffs will drive up the average price of a new car by $5,000 to $7,000. As for the impact on jobs, MEMA, the group that represents the auto parts supplier industry, told the Free Press it did not have a precise estimate for supplier job losses so far due to tariffs. But it referred to the Bureau of Labor Statistics' April report that noted a national net decline of 5,800 U.S. jobs in motor vehicle and parts production since February. The bureau does not distinguish between parts and vehicle manufacturing. In March, steelmaker Cleveland-Cliffs Inc. said it would idle some operations at its Dearborn plant this summer, tied to tariffs. It said it will lay off about 600 employees. In a statement at the time, the company said, 'We believe that, once President Trump's policies take full effect and automotive production is re-shored, we should be able to resume steel production at Dearborn Works.' But MEMA spokesperson Megan Gardner said that based on its internal surveys, a growing number of MEMA's 1,000 members have reported reducing U.S. employment — both production and nonproduction — and investment since the tariffs went into effect. She said many indicated they expect to make further cuts if tariffs remain in place over the next year. Still, Grigowski said he is sticking to his plan to hire a couple people this fall to work on that new machine from Japan. He even sees a potential upside to tariffs if some work that is currently done in Mexico shifts over to Team 1. 'That's a very real possibility," Grigowski said. "We've had some additional inquiries from a Canadian company." He also believes the Trump administration will negotiate tariffs country by country and come up with something workable for the auto industry, creating a "path out" of his problems. "It's like COVID. When it first happened, we thought we'd have to shut our plant down. Then we saw a path out," Grigowski said. "Ultimately, if these tariffs were to stay in place and they drove volumes down dramatically, then yeah, we'd have to make adjustments. We have to hope cooler heads will prevail. We're in a good financial position that we can wait for a solution. I feel like it's a significant problem, but a problem we can start to work.' Jamie L. LaReau is the senior autos writer who covers Ford Motor Co. for the Detroit Free Press. Contact Jamie at jlareau@ Follow her on Twitter @jlareauan. To sign up for our autos newsletter. Become a subscriber.
