Cullen Capital Management, LLC, also known as Schafer Cullen Capital Management, Inc. (SCCM), recently shared its first-quarter investor letter for the SCCM Enhanced Equity Income Fund. The letter highlighted the fund’s performance in a volatile market where US stocks showed mixed results. Despite the S&P 500 declining by 4.3%, the fund managed to outperform its benchmarks by returning 5.8% (net) in the first quarter.
The fund’s success was attributed to strong performance in seven sectors, including Information Technology, Consumer Discretionary, and Communication Services. This marked a reversal of the stratified equity market gains seen in the past two years. Investors can review the fund’s top 5 holdings to gain insights into its best picks for 2025.
One of the stocks highlighted in the investor letter was Philip Morris International Inc. (NYSE:PM). The tobacco company is focused on delivering a smoke-free future and has shown impressive growth over the past year. Despite a one-month return of -1.73%, the stock has appreciated by 75.04% in the last 52 weeks.
SCCM Enhanced Equity Income Fund mentioned in its letter that their position in Philip Morris International Inc. was called away in the quarter. While they view the company’s fundamentals favorably, the P/E ratio has increased to 21x earnings, at the higher end of its historical range.
Philip Morris International Inc. is not among the 30 most popular stocks among hedge funds, but 104 hedge fund portfolios held the stock at the end of the first quarter. The company reported double-digit organic net revenue growth of 10.2% in Q1 2025, reaching a total of $9.3 billion. While the potential of Philip Morris International Inc. as an investment is acknowledged, SCCM believes that AI stocks hold greater promise for delivering higher returns in a shorter timeframe.
For investors seeking promising AI stocks, SCCM recommends exploring an undervalued AI stock poised for massive gains. This stock is as promising as NVIDIA but trades at less than 5 times its earnings. By diversifying into AI stocks, investors can potentially capitalize on the growth opportunities presented by cutting-edge technology.
In conclusion, the SCCM Enhanced Equity Income Fund’s first-quarter investor letter provides valuable insights into the fund’s performance and investment strategy. With a focus on sectors showing strong performance and potential growth opportunities in AI stocks, SCCM aims to deliver attractive returns for its investors in 2025 and beyond.
