Wasatch Global Investors, an asset management company, recently released its first-quarter 2025 investor letter outlining the performance of its “Wasatch Small Cap Growth Strategy.” The letter can be downloaded here. The U.S. stock market experienced a decline in the quarter, impacted by concerns over tariffs and government funding cuts, as well as softer economic data. The Russell 2000® Growth index ended the quarter with a loss of -11.12%, with the Wasatch Small Cap Growth strategy also declining and lagging behind the benchmark.
One of the highlighted stocks in the investor letter was RBC Bearings Incorporated (NYSE:RBC). Based in Oxford, Connecticut, RBC Bearings manufactures engineered precision bearings and components. The stock saw a one-month return of -3.56% and a 32.49% increase in value over the last 52 weeks. As of April 17, 2025, RBC Bearings closed at $321.68 per share, with a market capitalization of $10.115 billion.
The investor letter praised RBC Bearings for its strong financial results, particularly in its aerospace and defense business. The company’s steady growth in these sectors has driven its stock higher. RBC Bearings sells precision bearings and components to industrial, defense, and aerospace industries, with a management team that has excelled at integrating recent acquisitions. The letter emphasized the underappreciated value of RBC’s diversified aerospace business, especially in light of the global growth in commercial aviation fleets.
Although RBC Bearings is not among the 30 most popular stocks among hedge funds, 22 hedge fund portfolios held the stock at the end of the fourth quarter. In the third quarter of 2025, RBC Bearings reported $394 million in net sales, a 5.5% increase from the previous year. While RBC Bearings shows promise as an investment, the letter highlighted a preference for AI stocks for potentially higher returns in a shorter timeframe. For those interested in AI stocks with promising potential, the letter recommended checking out a report on the cheapest AI stock, which offers similar promise to NVIDIA at a fraction of the cost.
Overall, the investor letter from Wasatch Global Investors provides valuable insights into the performance and potential of RBC Bearings and other investments in the small-cap growth strategy. Investors can use this information to make informed decisions about their portfolios moving forward.
