Here's Why Norwegian Cruise Line Holdings Ltd. (NCLH) Surged in Q3

Ariel Investments, an investment management company, released its “Ariel Small Cap Concentrated Value Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. US equities continued their rally in the third quarter, fueled by the Federal Reserve's initial rate cut of the year, strong corporate earnings growth, and increased market participation. In the quarter, Ariel Small Cap Concentrated Value Composite returned +15.08% gross of fees (+14.93% net of fees) compared to +12.60% and +12.39% returns of the Russell 2000 Value Index and the Russell 2000 Index, respectively. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, Ariel Small Cap Concentrated Value Strategy highlighted stocks such as Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH). Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is a cruise company that operates through Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises brands. The one-month return of Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) was -17.51%, and its shares lost 31.91% of their value over the last 52 weeks. On November 27, 2025, Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) stock closed at $18.33 per share, with a market capitalization of $8.345 billion.

Ariel Small Cap Concentrated Value Strategy stated the following regarding Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) in its third quarter 2025 investor letter:

"Additionally, Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) traded higher following strong quarterly results underpinned by resilient consumer demand, healthy onboard spending, attractive pricing, and a reacceleration in booking trends. The company is allocating more capacity to the Caribbean next year and substantially enhancing its private island, Great Stirrup Cay. NCLH continues to de-leverage its balance sheet—reducing interest expense and extending debt maturities beyond 2030—positioning the company to exceed its long-range EPS target for 2026. Despite broader industry concerns surrounding the global minimum tax, NCLH remains unaffected due to its Bermuda tax domicile exemption. Looking ahead, the company is focused on optimizing its cost structure and improving margins to support sustainable, profitable growth."

Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 58 hedge fund portfolios held Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) at the end of the third quarter, which was 45 in the previous quarter. While we acknowledge the potential of Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) 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 Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) and shared the list of most undervalued NYSE stocks to buy. 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.