Hotchkis & Wiley Large Cap Disciplined Value Fund's Updates on F5 (FFIV)

Hotchkis & Wiley, an investment management company, released its “Hotchkis & Wiley Large Cap Disciplined Value Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The S&P 500 rose 10.9% in Q2 2025, despite recent volatility. After the "liberation day” tariff announcement on April 2, the index plunged over 12% in four days. The market rebounded from this low, nearly +25% over the next ~11 weeks, to finish the quarter at an all-time high. In this environment, the fund performed in line with the Russell 1000 Value Index and returned 3.37% vs. 3.79% for the index. Please review the fund's top 5 holdings to gain insight into their key selections for 2025.

In its second-quarter 2025 investor letter, Hotchkis & Wiley Large Cap Disciplined Value Fund highlighted stocks such as F5, Inc. (NASDAQ:FFIV). F5, Inc. (NASDAQ:FFIV) offers multi-cloud application security and delivery solutions. The one-month return of F5, Inc. (NASDAQ:FFIV) was 1.05%, and its shares gained 46.95% of their value over the last 52 weeks.  On July 29, 2025, F5, Inc. (NASDAQ:FFIV) stock closed at $299.24 per share, with a market capitalization of $17.186 billion.

Hotchkis & Wiley Large Cap Disciplined Value Fund stated the following regarding F5, Inc. (NASDAQ:FFIV) in its second quarter 2025 investor letter:

"F5, Inc. (NASDAQ:FFIV) sells application networking and security software and data center appliances, where it has 50%+ market share in traditional ADCs (application delivery controllers) along with various multicloud networking and application security products. Demand for F5’s products grows faster than gross domestic product (GDP), products are critical to the functioning of applications resulting in highly sticky customer relationships, and ~75% of annual revenue is recurring. F5 posted another good quarterly earnings report and raised revenue and earnings per share (EPS) guidance for the full year. We continue to believe the company is misunderstood and gets incorrectly classified as a legacy IT hardware vendor, resulting in an attractive valuation. Strong free cash flow generation and a net cash balance sheet provide downside protection. Capital allocation has improved significantly in recent years and management has committed to returning at least 50% of free cash flow (FCF) to shareholders."

F5, Inc. (NASDAQ:FFIV) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held F5, Inc. (NASDAQ:FFIV) at the end of the first quarter, which was 37 in the previous quarter. F5, Inc.’s (NASDAQ:FFIV) fiscal second quarter revenues reached $731 million, showcasing a 7% year-over-year improvement. While we acknowledge the potential of F5, Inc. (NASDAQ:FFIV) 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.

In another article, we covered F5, Inc. (NASDAQ:FFIV) and shared the list of cheapest high-quality stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.