Advance Auto Parts (AAP) is Hurt by Inflation Dynamics and Consumer Behavior

iMGP Global Partner, an investment management company, released its fourth quarter 2025 investor letter for the "iMGP Small Company Fund”. The Fund returned 1.33% in the fourth quarter compared to the Russell 2000 Index’s 3.26% return. The Fund’s returns were flat at 0.01% in 2025, compared to a 12.81 return for the Index. In many respects, the market situation returned to normal in the fourth quarter. The Fund's poor performance in the fourth quarter was caused by the biotech businesses' impressive performance, which increased by more than 25%. The Fund generally avoids biotech stocks due to their extremely binary character. The majority of the year's underperformance happened in the third quarter due to style-related factors. Moving forward to 2026, the Fund hoped to continue to refine its process and improve its performance with a commitment to invest in high-quality, growing firms. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, iMGP Small Company Fund highlighted stocks like Advance Auto Parts, Inc. (NYSE:AAP). Based in Raleigh, North Carolina, Advance Auto Parts, Inc. (NYSE:AAP) is an automotive replacement parts and accessories provider. The one-month return of Advance Auto Parts, Inc. (NYSE:AAP) was -8.99%, and its shares gained 37.59% of their value over the last 52 weeks. On March 06, 2026, Advance Auto Parts, Inc. (NYSE:AAP) stock closed at $50.33 per share, with a market capitalization of $3.025 billion.

iMGP Small Company Fund stated the following regarding Advance Auto Parts, Inc. (NYSE:AAP) in its fourth quarter 2025 investor letter:

"At the individual name level, the largest detractor during the quarter was Consumer Discretionary holding Advance Auto Parts, Inc. (NYSE:AAP). AAP is undertaking a significant turnaround under new leadership. Although we are seeing ROIC enhancing decisions and actions, earnings have yet to inflect. As we have discussed in the past, the current market continues to view only real-time results as those that deserve credit. AAP remains one of our highest convictions long-term ROIC opportunity holdings, but the timing of a larger inflection has been slightly pushed out by inflation dynamics and consumer behavior."