Wedgewood Partners, an investment management company, released its fourth-quarter 2025 investor letter. The firm anticipates stronger market volatility in the coming years and has moderated its enthusiasm. A copy of the letter can be downloaded here. The Wedgewood Composite returned -1.8% (net) in the fourth quarter compared to the S&P 500’s 2.7%, the Russell 1000 Growth Index’s 1.1%, and the Russell 1000 Value Index’s 3.8% returns. YTD, the Composite gained 4.3% compared to 17.9%, 18.6%, and 15.9% returns for the indexes, respectively. Wedgewood Partners’ focus on high-quality stocks has historically worked since 1992, but not in 2025. The letter highlighted poor stock selection, the portfolio’s strong past performers due for valuation correction, and being structurally underweight in AI stocks drove the underperformance. The letter noted that in 2026, crowded AI investments and stretched valuations create pressure on prudent investment decisions. In addition, you can check the Fund’s top 5 holdings to determine its best picks for 2025.
In its fourth-quarter 2025 investor letter, Wedgewood Partners highlighted Meta Platforms, Inc. (NASDAQ:META) as a leading detractor to performance. Meta Platforms, Inc. (NASDAQ:META) is a technology company that develops products to connect people. On January 16, 2026, Meta Platforms, Inc. (NASDAQ:META) stock closed at $620.25 per share. One-month return of Meta Platforms, Inc. (NASDAQ:META) was -6.24%, and its shares gained 1.22% of their value over the last 52 weeks. Meta Platforms, Inc. (NASDAQ:META) has a market capitalization of $1.56 trillion.
Wedgewood Partners stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its fourth quarter 2025 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) was a leading detractor from performance during the quarter despite reporting +26% revenue growth. Earnings per share grew less (+20%) after the Company ramped up spending related to its long-term AI ambitions. Meta’s social media platforms are as popular as ever, with daily active users rising +8% during the September quarter compared to a year earlier, and users spending +5% more time on its applications. The Company’s social media juggernaut – with just over 3.5 billion people accessing one of Meta’s platforms every single day – generates enormous volumes of highly valuable data for their global advertisers.
This might be surprising to many, but the Company has been using AI tools for more than a decade to manage and drive productivity across the different sides of this massive network. For example, their Andromeda machine learning system automatically retrieves and ranks tens of millions of potential ads based on each user’s preferences and then selects and serves a fraction of those ads, replacing broader, more traditional audience segmentation with highly targeted selections, all in a matter of just seconds. Meta has a proven track record of making these highly productive AI investments that have yielded exceptional growth and returns on invested capital. We expect this to continue.”
Meta Platforms, Inc. (NASDAQ:META) is in the third position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 273 hedge fund portfolios held Meta Platforms, Inc. (NASDAQ:META) at the end of the third quarter, which was 260 in the previous quarter. In the third quarter of 2025, Meta Platforms, Inc. (NASDAQ:META) reported revenue of $51.2 billion, representing an increase of 26% or 25% on a constant currency basis. While we acknowledge the risk and potential of Meta Platforms, Inc. (NASDAQ:META) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Meta Platforms, Inc. (NASDAQ:META) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Meta Platforms, Inc. (NASDAQ:META) and shared the list of best stocks to buy in 2026 for beginners. In addition, please check out our hedge fund investor letters Q4 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.
