FedEx Stock Surges as Value Fund Touts Gains Amid Cautious Market
In a quarter where the S&P 500 extended its remarkable post-financial crisis run, the Hotchkis & Wiley Large Cap Disciplined Value Fund reported strong relative performance, crediting savvy stock selection. The fund's fourth-quarter 2025 investor letter, released recently, spotlighted FedEx Corporation (NYSE: FDX) as a standout holding that helped drive returns.
The broader market landscape remains complex. The S&P 500 gained 2.7% in Q4 2025, capping a year with a 17.9% return. Since the 2008 crisis, the index has soared tenfold. Yet, high overall valuations have many investors wary, especially with gains heavily concentrated in a handful of mega-cap technology stocks. Excluding the so-called "Magnificent Seven," the market's forward price-to-earnings ratio appears more in line with historical norms.
Against this backdrop, the disciplined value approach paid off. The Hotchkis & Wiley fund beat the Russell 1000 Value Index both for the quarter and the full calendar year. "Our focus on identifying undervalued companies with durable business models was particularly effective in a market rewarding selective fundamentals," the letter noted.
FedEx Delivers for the Portfolio
FedEx emerged as a primary individual contributor. The transportation and e-commerce behemoth saw its stock climb 9.14% in the month leading up to the letter's publication and has gained 20.79% over the past 52 weeks. As of January 29, 2026, shares closed at $319.93, giving the company a market capitalization of approximately $75.5 billion.
The fund attributed the strength to FedEx's solid second-quarter fiscal 2026 results, where revenue grew 7% year-over-year. This was powered by robust yield and volume in its core U.S. domestic package segment, demonstrating resilience amid broader economic crosscurrents.
However, the letter struck a balanced tone. While acknowledging FedEx's potential, the managers suggested that certain AI-focused equities might present more attractive risk-reward profiles. "FedEx is a testament to our value discipline, but we see other areas, particularly in AI, offering greater upside with potentially less downside in the current cycle," the letter stated, directing readers to a separate report on AI stock opportunities.
Notably, hedge fund interest in FedEx saw a slight dip; 60 funds held the stock at the end of Q3 2025, down from 67 in the prior quarter, according to the fund's database.
Investor Reactions: A Mix of Praise and Skepticism
Michael Thorne, Portfolio Manager at Ridgecrest Advisors: "This is a classic case of value investing working as intended. FedEx isn't a flashy AI play, but its cash flow generation and market position are real. In a market drunk on tech narratives, it's refreshing to see fundamentals rewarded."
David Chen, Independent Market Analyst: "The fund's outperformance is impressive, but let's be real—beating a value index in a year tech led the market isn't the highest bar. Highlighting FedEx after a 20% run feels backward-looking. The real question is what they're buying now, not what already popped."
Sarah Jenkins, Retail Investor & Finance Blogger: "As a long-term FDX shareholder, this validation feels good. It's a boring business to some, but global logistics is the bloodstream of commerce. This report underscores that not all gains need to come from the usual tech suspects."
Lisa Morrow, Chief Strategist at Horizon Capital (sharply): "This is window dressing. A value fund patting itself on the back for holding a giant like FedEx? Big deal. The slight drop in hedge fund ownership tells a more nuanced story—the smart money might be trimming. Their own admission that AI stocks look better is a glaring contradiction. Why champion a holding you implicitly rank second-best?"
The full investor letter provides deeper insight into the fund's top holdings and its outlook for 2026. Hotchkis & Wiley's commentary reflects a broader tug-of-war in markets: between chasing high-growth narratives and adhering to value principles in an expensive ecosystem.
Disclosure: This analysis is based on publicly available fund documents and is for informational purposes only. It is not investment advice.