EARNEST Partners Buys the Dip in Hexcel Stock

EARNEST Partners LLC significantly increased its Q2 2025 position in Hexcel Corporation (HXL) by 418,477 shares, an estimated $22.13 million transaction, raising HXL to 1.3% of its 13F assets. This strategic increase by the investment adviser signals a long-term conviction in Hexcel, a key advanced materials supplier to the aerospace sector, despite its recent underperformance (negative 17% alpha vs S&P 500) attributed to aerospace production delays. The move likely anticipates a recovery driven by substantial aircraft backlogs and the increasing use of composites in new aircraft, positioning it as a potential value play for patient investors.

Analysis

Investment adviser EARNEST Partners LLC has substantially increased its stake in Hexcel Corporation (HXL), acquiring 418,477 shares in Q2 2025 for an estimated $22.13 million. This purchase elevates Hexcel to 1.3% of the fund's 13F portfolio, with a total position valued at $290.4 million, signaling strong institutional conviction despite the stock's recent challenges. Hexcel has notably underperformed, posting a negative one-year alpha of 17.0 percentage points against the S&P 500, a direct consequence of persistent aircraft production delays at its key OEM customers, Airbus and Boeing. The company's vulnerability is heightened by its limited exposure to the more stable aftermarket segment, which has compressed margins as Hexcel had geared up for production volumes that did not materialize. The investment thesis appears to be a long-term play on two key tailwinds: the immense and growing aircraft backlogs at Airbus (8,754 planes) and Boeing (over 5,900 planes), and the secular trend of increasing composite material content in newer, more efficient aircraft. While the stock trades 13.3% below its 52-week high, its forward P/E of 25.11 suggests a recovery is partially priced in, making the timing of the aerospace supply chain resolution the critical variable for investors.

Key Decisions for Investors

• Investors with a long-term horizon could view Hexcel's recent stock underperformance and the significant institutional buying from EARNEST Partners as a strategic entry point, betting on a multi-year aerospace recovery cycle.
• Closely monitor production rates and delivery guidance from key customers Airbus and Boeing, as these are the most critical leading indicators for Hexcel's revenue and margin expansion.
• Acknowledge that the investment requires patience, as the timing for resolving aerospace supply chain bottlenecks is uncertain and could result in continued near-term stock price volatility.
• Evaluate the valuation in the context of a recovery play; a forward P/E of 25.11 indicates that the market anticipates a turnaround, so the alpha will be generated by the actual pace and scale of the recovery exceeding current expectations.