Is RLI Corp (RLI) a Good Investment Choice?

Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the third quarter, the fund returned 7.46% compared to a 12.60% return for the Russell 2000 Value Index. In the first three quarters of 2025, the Fund returned 13.77%, compared to 9.04% for the index. As the firm’s focus is on a diligent, disciplined, and patient process, it expects the fund to outperform in down markets and trail in speculative markets. Additionally, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, the FPA Queens Road Small Cap Value Fund highlighted stocks such as RLI Corp. (NYSE:RLI). RLI Corp. (NYSE:RLI) is an insurance holding company. The one-month return of RLI Corp. (NYSE:RLI) was 7.17%, and its shares lost 29.74% of their value over the last 52 weeks. On November 24, 2025, RLI Corp. (NYSE:RLI) stock closed at $63.55 per share, with a market capitalization of $5.836 billion.

FPA Queens Road Small Cap Value Fund stated the following regarding RLI Corp. (NYSE:RLI) in its third quarter 2025 investor letter:

"RLI Corp. (NYSE:RLI) as of the end is a specialty property and casualty insurer. The company is extremely selective in writing business. Its diversified lines include niche-y areas such as public and school busses, Hawaii homeowners unique culture, incentive structures and willingness to walk away from unprofitable business have, and surety. RLI’s historically to exceptional financial performance. From 2015 through 2024, the company’s combined ratio has averaged led 89.3% and its ROE has averaged 16.6% despite being weighed down by excess capital. We have owned RLI since 2011 and the stock usually commands a premium valuation – roughly 20x this year’s earnings."

RLI Corp. (NYSE:RLI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 29 hedge fund portfolios held RLI Corp. (NYSE:RLI) at the end of the second quarter, compared to 32 in the previous quarter. While we acknowledge the potential of RLI Corp. (NYSE:RLI) 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 RLI Corp. (NYSE:RLI) and shared LRT Global Opportunities Strategy's views on the company. In addition, please check out our hedge fund investor letters Q3 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.