Longleaf Partners, under the guidance of Southeastern Asset Management, recently released its investor letter for the fourth quarter of 2025. The fund recorded a 3.35% return during this period, modestly outperforming the S&P 500's 2.66% but slightly lagging behind the Russell 1000 Value Index's 3.81%. The year 2025 presented difficulties for the firm, as few holdings achieved substantial gains, with only about 5% of the portfolio seeing increases of 20% or more, a stark contrast to the S&P 500's 35%. This market dynamic largely influenced the fund's underperformance. Longleaf Partners emphasizes its commitment to bolstering portfolio results through strategic actions, rather than pursuing short-term gains. The firm posits that constructing a portfolio of strong, proactive companies during periods of market speculation will ultimately yield benefits across all market segments.
Within this letter, Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), a prominent biotechnology firm headquartered in Tarrytown, New York, was singled out as a significant holding. As of January 16, 2026, Regeneron's stock closed at $733.04 per share, experiencing a one-month decline of 5.94% but demonstrating a 7.55% increase over the past 52 weeks, with a market capitalization of $77.693 billion.
Longleaf Partners' assessment of Regeneron Pharmaceuticals, Inc. underscores its conviction in the company's prospects. Initially, Regeneron's performance in the first half of the year was a drag on the portfolio. However, strategic phased investments ultimately positioned it as a contributor by year-end. The firm expresses continued confidence in Regeneron's dominant presence in the allergic disease market through DUPIXENT, and its growing influence in oncology with LIBTAYO and other therapeutic agents. Longleaf Partners believes that the market's focus on EYLEA, a retinal disease treatment representing less than 20% of the company's total valuation, leads to an undervaluation of Regeneron's broader potential. The company's strong financial health, characterized by a net cash balance sheet, and its management's dedication to shareholder value, evidenced by substantial share repurchases in 2025 and an aversion to large-scale mergers and acquisitions typical of the industry, further reinforce this positive outlook. Despite some initial setbacks in its pipeline, the latter half of the year saw more favorable developments. The price-to-value ratio remains attractive, making Regeneron a key and exciting component of the portfolio moving into the new year.
Regeneron Pharmaceuticals, Inc. is not currently featured on the list of the 30 most favored stocks among hedge funds. Our analysis indicates that 78 hedge fund portfolios held shares in Regeneron Pharmaceuticals, Inc. at the close of the third quarter, a rise from 73 in the preceding quarter. While acknowledging Regeneron's investment potential, there are other AI stocks that may present superior upside opportunities with reduced risk. For those seeking an undervalued AI stock poised to benefit from current tariffs and reshoring trends, specialized reports offer further insights. Additionally, details on debt-free dividend stocks and comprehensive hedge fund investor letters for Q4 2025 are available for review, providing a broader perspective on investment strategies.
