Sustainable Growth Advisers (SGA), an investment management company, recently released its third-quarter investor letter for its “U.S. Large Cap Growth Strategy.” Despite facing challenges in the market, SGA remains focused on investing in high-quality growth businesses with the potential for consistent mid-teens earnings growth.
In the third quarter, the portfolio returned -1.3% (Gross) and -1.4% (Net), underperforming the Russell 1000 Growth Index and the S&P 500 Index. The market leadership was adverse for SGA’s investment style as lower-quality stocks and cyclical industries outperformed. However, SGA remains confident in its strategy and is committed to delivering value for its investors.
One of the standout stocks in SGA’s portfolio is Apple Inc. (NASDAQ:AAPL). Apple is a multinational company known for designing, manufacturing, and marketing a range of consumer electronics products. Despite facing challenges such as talent acquisition and AI development, Apple showed resilience in its performance. The company experienced strong demand for its products, particularly in China, where subsidies fueled consumer interest.
Apple’s revenue in the September quarter saw an 8% year-over-year increase, reaching $102.5 billion. The stock closed at $271.86 per share on December 31, 2025, with a market capitalization of $4.035 trillion. SGA views Apple as a valuable contributor to portfolio returns and expects mid to high single-digit top-line growth in the upcoming quarter.
In terms of hedge fund interest, Apple ranks 8th on the list of 30 Most Popular Stocks Among Hedge Funds. As of the end of the third quarter, 166 hedge fund portfolios held Apple, reflecting a slight increase from the previous quarter. While Apple remains a solid investment option, SGA believes that certain AI stocks offer greater upside potential with less downside risk.
For investors looking for undervalued AI stocks, SGA recommends exploring opportunities beyond Apple. The company’s strong buyback activity and stable valuation make it a reliable choice, but other AI stocks may offer more significant growth prospects.
In conclusion, SGA’s third-quarter investor letter underscores the importance of strategic investment decisions in navigating market challenges. While Apple continues to be a key player in SGA’s portfolio, the company is exploring opportunities in the AI sector for potential growth. For more insights on Apple and other investment opportunities, readers can explore additional articles and investor letters on Insider Monkey.
