Aristotle Capital Exited Xylem (XYL) Despite Its Potential and Long-Term Catalysts. Here’s Why

Aristotle Capital Management, LLC, an investment management company, released its “Value Equity Strategy” second quarter 2025 investor letter. A copy of the letter can be downloaded here. Although the U.S. equity market started with volatility in the second quarter, it rebounded with strength, with the S&P 500 Index rising 10.94% during the quarter. The composite returned 4.88% gross of fees (4.75% net of fees) in the first quarter, outperforming the 3.78% return of the Russell 1000 Value Index and underperforming the 10.94% return of the S&P 500 Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second quarter 2025 investor letter, Aristotle Capital Value Equity Strategy highlighted stocks such as Xylem Inc. (NYSE:XYL). Headquartered in Washington, District of Columbia, Xylem Inc. (NYSE:XYL) designs, manufactures, and services engineered products and solutions for the utility, industrial, and residential and commercial building services. The one-month return of Xylem Inc. (NYSE:XYL) was 2.79%, and its shares lost 4.14% of their value over the last 52 weeks. On July 22, 2025, Xylem Inc. (NYSE:XYL) stock closed at $131.05 per share, with a market capitalization of $31.891 billion.

Aristotle Capital Value Equity Strategy stated the following regarding Xylem Inc. (NYSE:XYL) in its second quarter 2025 investor letter:

“During the quarter, we sold our position in Xylem Inc. (NYSE:XYL) and invested in Uber. We first invested in Xylem, the global water technology company, in the first quarter of 2020. During our holding period, the company made meaningful progress on its initiatives to improve profitability, driven in part by a strategic shift toward higher-margin software and services. In addition, the acquisition of Evoqua further strengthened its water treatment capabilities and broadened its exposure to resilient industrial end markets. Xylem also continued to expand its portfolio across utility and industrial customers, reinforcing its leadership in water-related technologies. In early 2024, the company underwent a leadership transition, with Matthew Pine stepping in as CEO and Bill Grogan as CFO. Pine, formerly COO, brought operational experience from Carrier Residential, while Grogan joined from IDEX, where he helped drive the successful adoption of the 80/20 operating model. Under their leadership, Xylem has begun refocusing its strategy from scaling an ESG-led vision to pursuing operational efficiency through 80/20 principles, a shift still in its early stages. While we continue to recognize Xylem’s potential and long-term catalysts, we chose to exit our position to fund what we believe is a more compelling opportunity in Uber.”

In another article, we covered Xylem Inc. (NYSE:XYL) and shared JPMorgan’s coverage of the stock with overweight rating. In addition, please check out our hedge fund investor letters Q2 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.