The London Company's Large Cap portfolio experienced a 6.3% gross return (6.2% net) in the third quarter of 2025, slightly underperforming the Russell 1000's 8.0% increase. In a market characterized by extended valuations and considerable speculation, the firm advocates for a strategic approach that prioritizes robust, fairly priced enterprises demonstrating prudent capital management. This methodology aims to ensure sustained wealth accumulation throughout various economic cycles, emphasizing stability and intrinsic value over speculative trends.
During the recent quarter, two key holdings, Google (GOOG) and TEL, emerged as leading contributors to the portfolio's positive performance. Google's strong showing was primarily driven by the robust results of its foundational business segments and the rapid integration and adoption of its artificial intelligence technologies. This indicates a successful leveraging of innovation to bolster its market position and financial health.
Similarly, TEL benefited significantly from increased investment in AI infrastructure, alongside demonstrating enhanced profit margins. This achievement is particularly noteworthy given a mixed demand landscape across other sectors where TEL operates, underscoring the company's ability to navigate varied market conditions effectively.
Conversely, the trucking industry, including specific companies like ODFL, encountered a challenging period within the quarter. This downturn was largely attributed to persistent softness in the industrial economy, which impacted freight volumes and overall sector profitability. This illustrates the vulnerability of certain industries to broader economic headwinds, even as other sectors thrive.
The firm maintains a disciplined investment philosophy, concentrating on identifying companies that possess intrinsic value and exhibit strong financial health, rather than succumbing to market fads or short-term speculative surges. This focus on fundamentals and long-term potential is deemed crucial for protecting and growing client assets, especially in volatile market environments.
Despite the broader market's inclination towards speculative investments and inflated valuations, The London Company remains steadfast in its commitment to a strategy that favors resilience, attractive valuation, and responsible capital deployment. This considered approach is designed to mitigate risks and capitalize on genuine growth opportunities, ensuring that the portfolio is well-positioned for enduring success.