Perimeter Solutions (PRM) Declined Despite Strong Results

Weitz Investment Management, an investment management firm, released its “Multi-Cap Equity Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here.  The fund’s Institutional Class returned +0.81% in the first quarter compared to -4.72% for the Russell 3000. In late January, the “AI Trade” faced a challenge when the Chinese company DeepSeek revealed that it had created an advanced AI model significantly lower cost than its U.S. counterparts. This announcement resulted in increased scrutiny from investors regarding the spending strategies of US firms. Investors' and corporate leaders' confidence is challenged by uncertainties related to trade and tariffs, which causes equities to decline as the quarter draws to a close. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.

In its first-quarter 2025 investor letter, Weitz Multi-Cap Equity Fund highlighted stocks such as Perimeter Solutions, Inc. (NYSE:PRM). Founded in 1963, Perimeter Solutions, Inc. (NYSE:PRM) manufactures and distributes firefighting products and lubricant additives. The one-month return of Perimeter Solutions, Inc. (NYSE:PRM) was 15.00%, and its shares gained 54.75% of their value over the last 52 weeks. On May 23, 2025, Perimeter Solutions, Inc. (NYSE:PRM) stock closed at $11.73 per share with a market capitalization of $1.733 billion.

Weitz Multi-Cap Equity Fund stated the following regarding Perimeter Solutions, Inc. (NYSE:PRM) in its Q1 2025 investor letter:

"Perimeter Solutions, Inc. (NYSE:PRM) reported a strong fourth quarter, capping an above-average fire season, yet shares were down in 1Q. Investors are likely anticipating a reduced wildfire experience in 2025 and are expressing some skepticism over the announced, modest-sized acquisition of IMS Corp, a maker of niche printed circuit boards. While far afield of Perimeter’s core business, management has long articulated a “platform” approach to acquisitions, pursuing different business lines that meet their criteria and provide additional verticals for organic growth and bolt-on acquisitions."

Perimeter Solutions, Inc. (NYSE:PRM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Perimeter Solutions, Inc. (NYSE:PRM) at the end of the first quarter which was 31 in the previous quarter. Perimeter Solutions, Inc.'s (NYSE:PRM) first quarter consolidated sales increased 22% to $72 million. While we acknowledge the potential of Perimeter Solutions, Inc. (NYSE:PRM) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Perimeter Solutions, Inc. (NYSE:PRM) and shared the list of best small-cap chemical stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q1 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.