By Eva Richardson | April 3, 2025 | The Logistic News
In a volatile year where small-cap value stocks struggled to hold gains, one fund manager made a bold move: doubling down on logistics.
River Road Asset Management, through its Small Cap Value Fund, added GXO Logistics, Inc. (NYSE:GXO) as its largest new position in Q4 2024—a calculated move that underscores the long-term belief in warehousing and supply chain infrastructure, even amid broader market uncertainty.
The fund’s quarterly letter revealed that GXO stood out for its global scale, diversified customer base, and specialized logistics services, despite the company’s underperformance in 2024, when its shares fell more than 23%.
Why GXO? A Scalable Bet on Modern Supply Chains
Founded in 2021 through a spinoff from XPO Logistics, GXO has quickly become one of the world’s largest pure-play contract logistics providers, operating across 1,000 facilities and nearly 200 million square feet in 27 countries.
Its core services—order fulfillment, reverse logistics, automation-driven warehousing, and e-commerce distribution—position it squarely at the center of modern, consumer-driven supply chains. With customers across key verticals including omni-channel retail (42%), tech and electronics (15%), CPG and industrials (22%), the company has built a resilient, recurring revenue model.
“GXO Logistics fits our strategy of targeting durable small-cap companies with proven operators and long-term growth potential,” River Road wrote in the letter. The move comes despite short-term headwinds and a leadership transition—CEO Malcolm Wilson is expected to step down in 2025, with a successor yet to be named.
The Jacobs Legacy and GXO’s Future
Much of GXO’s strategic DNA comes from Brad Jacobs, the founder of multiple billion-dollar logistics ventures, including United Rentals and XPO Logistics. Though no longer in an executive role, Jacobs serves as Chairman, and his track record of building high-growth, high-return businesses continues to lend investor confidence.
The timing of River Road’s position suggests belief in a post-2024 rebound, especially as GXO’s fundamentals remain strong. In Q4 2024 alone, the company posted $3.3 billion in revenue, representing 25% year-over-year growth, driven by growing demand for outsourced logistics amid rising fulfillment complexity.
Hedge Funds Take Notice
GXO has not gone unnoticed by institutional players. 49 hedge funds held positions in GXO at the end of Q4 2024, up from 33 the previous quarter. This increase reflects growing interest in warehousing and third-party logistics, especially as companies recalibrate their supply chains to reduce costs and improve delivery speed.
While some investors still view AI and tech stocks as the more explosive growth opportunity, GXO offers a lower volatility alternative, with real-world infrastructure and high barriers to entry.
Valuation Reset and Strategic Entry Point
Despite its recent decline, GXO shares closed at $39.39 on April 1, 2025, giving the company a market cap of $4.7 billion. With operations spanning the U.S., Europe, and key emerging markets, GXO has the geographic footprint and automation capabilities to weather economic cycles.
River Road’s contrarian play may prove prescient if macro conditions stabilize, labor markets improve, and demand for e-commerce and supply chain optimization reaccelerates in late 2025.
Conclusion
In an environment where logistics firms face rising costs, talent shortages, and global uncertainty, GXO’s tech-enabled warehousing model offers both defensive strength and scalable growth. For River Road Small Cap Value Fund, it’s not just a bet on one company—it’s a vote of confidence in the future of supply chain as a strategic asset class.
As the market turns the corner on volatility, GXO Logistics could be well-positioned to lead a new wave of growth in the logistics and warehousing sector.
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