Soumya Eswaran
2 min read
The London Company, an investment management company, released “The London Company Small Cap Strategy” first quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S. equities experienced a correction in 1Q25 due to macro risks, weak economic growth, and inflation. The fund declined 6.9% (-7.1%, net) compared to a 9.5% decrease in the Russell 2000 Index. The positive impact of stock selection contributed to the strategy's relative performance in the quarter, partially offset by sector exposure. For more information on the fund’s top picks in 2025, please check its top five holdings.
In its first-quarter 2025 investor letter, The London Company Small Cap Strategy highlighted stocks such as Somnigroup International Inc. (NYSE:SGI). Somnigroup International Inc. (NYSE:SGI) is a bedding products manufacturer. The one-month return of Somnigroup International Inc. (NYSE:SGI) was 8.57%, and its shares gained 20.44% of their value over the last 52 weeks. On May 12, 2025, Somnigroup International Inc. (NYSE:SGI) stock closed at $64.23 per share with a market capitalization of $13.397 billion.
The London Company Small Cap Strategy stated the following regarding Somnigroup International Inc. (NYSE:SGI) in its Q1 2025 investor letter:
"Somnigroup International Inc. (NYSE:SGI) - SGI continues to perform well despite weak industry demand. The approval of the Mattress Firm deal during the quarter is a major development, offering long-term benefits through vertical integration and enhancing its competitive position. Valuation remains compelling and our investment thesis is supported by robust free cash flow generation, strong brand equity, and solid management execution."
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Somnigroup International Inc. (NYSE:SGI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. In Q4 2025, Somnigroup International Inc (NYSE:SGI) reported net sales of approximately $1.2 billion and adjusted EPS of $0.60. While we acknowledge the potential of Somnigroup International Inc. (NYSE:SGI) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
