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RS Investments, an investment management company, released its “RS Concentrated All Cap Value Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The S&P 500® Index saw a 25% gain for the year, following a 23% increase in 2023. Such back-to-back years of over 20% returns are rare, highlighting the overall positive trend despite some year-end weakness. In the fourth quarter, the strategy outperformed its benchmark Russell 3000® Value Index (the “Index”) and returned 1.07% net versus a return of -1.94% for the Index. The strong performance from stock selection in Health Care and Utilities aided relative performance in the quarter, while stock selection in Real Estate and Consumer Staples detracted. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
In its fourth quarter 2024 investor letter, RS Concentrated All Cap Value Strategy emphasized stocks such as NICE Ltd. (NASDAQ:NICE). NICE Ltd. (NASDAQ:NICE) is a cloud platform provider for AI-driven digital business solutions. The one-month return of NICE Ltd. (NASDAQ:NICE) was 10.57%, and its shares lost 38.93% of their value over the last 52 weeks. On March 28, 2025, NICE Ltd. (NASDAQ:NICE) stock closed at $155.48 per share with a market capitalization of $10.16 billion.
RS Concentrated All Cap Value Strategy stated the following regarding NICE Ltd. (NASDAQ:NICE) in its Q4 2024 investor letter:
"We initiated a position in NICE Ltd. (NASDAQ:NICE), a leading call center software provider, at a 7.5% free cash flow yield. The stock has been weak because of concerns that artificial intelligence (AI) will reduce the number of call center employees and that larger companies, including Microsoft and Salesforce, Inc., will leverage their AI strength to take market share. We believe both of these concerns are misplaced. If AI is successful in reducing headcount at call centers, it will provide massive value to NICE’s customers and NICE will be able to charge more for its software, creating a win-win situation. Additionally, although large competitors are very focused on AI, we think it is unlikely that NICE as the incumbent will be displaced. Call center jobs are repetitive and low technologically, so the key to winning is not who has the most powerful AI model, but instead who has the largest data pool of relevant data to train its AI model. NICE is competitively advantaged over any new entrant because it has the largest data repository of call center interactions. If NICE is successful in deploying AI within its customers, NICE’s revenue growth should accelerate, and we expect the market will pay a higher multiple."