American Century Investments, an investment management company, recently released its third-quarter 2025 investor letter for the “American Century Investments Small Cap Value Fund.” Equities saw a strong rise in the third quarter, with several hitting record highs. The US Federal Reserve also reduced its benchmark interest rate for the first time in the year during this period.
The Small Cap Value Fund aims to invest in small-cap companies that are undervalued and do not accurately represent their quality and potential earnings capability. In the third quarter, the investor class of the fund returned 4.69%, compared to 12.60% for the Russell 2000 Value Index. For more details, the full investor letter can be downloaded from the provided link.
One of the highlighted stocks in the investor letter was Bath & Body Works, Inc. (NYSE:BBWI). This specialty retailer offers home fragrance, personal, and body care products. Despite a one-month return of 5.55%, its shares have seen a 43.26% loss over the last 52 weeks. As of January 2, 2026, Bath & Body Works, Inc. (NYSE:BBWI) closed at $20.74 per share, with a market capitalization of $4.276 billion.
In the investor letter, American Century Investments Small Cap Value Fund mentioned their position in Bath & Body Works, Inc. (NYSE:BBWI) due to the company’s high margins and potential for rapid growth. They believe the company’s low valuation is temporary and that strong free cash flows can help mitigate risk as strategic initiatives take hold.
While Bath & Body Works, Inc. (NYSE:BBWI) is not among the 30 Most Popular Stocks Among Hedge Funds, it is still held by 49 hedge fund portfolios at the end of the third quarter. The potential of Bath & Body Works, Inc. (NYSE:BBWI) as an investment is acknowledged, but certain AI stocks are considered to offer greater upside potential with less downside risk.
For more insights on stocks quietly climbing toward 2026 and hedge fund investor letters from Q3 2025, readers can refer to the provided links. Stay informed about the latest investment trends and updates by following the American Century Investments Small Cap Value Fund and other leading investors in the market.
