Can Brown & Brown (BRO) Deliver Strong Returns Across Economic Cycles?

Parnassus Investments, an investment management company, released the “Parnassus Core Equity Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund (Investor Shares) fell -2.44% (net of fees) in the quarter, outperforming the S&P 500 Index’s -4.27% return. U.S. equities fell in the first quarter, showing a shift from the robust gains of the previous quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Parnassus Core Equity Fund highlighted stocks such as Brown & Brown, Inc. (NYSE:BRO). Headquartered in Daytona Beach, Florida, Brown & Brown, Inc. (NYSE:BRO) provides insurance products and services. The one-month return of Brown & Brown, Inc. (NYSE:BRO) was -2.97%, and its shares gained 20.21% of their value over the last 52 weeks. On June 25, 2025, Brown & Brown, Inc. (NYSE:BRO) stock closed at $108.38 per share, with a market capitalization of $35.746 billion.

Parnassus Core Equity Fund stated the following regarding Brown & Brown, Inc. (NYSE:BRO) in its Q1 2025 investor letter:

“Our overweight in the Financials sector grew as we added the insurance broker Brown & Brown, Inc. (NYSE:BRO). We believe the company is well positioned for strong returns across economic cycles. Our overweights within Financials continue to emphasize data and exchange companies and service oriented businesses like insurance providers, which we prefer over banks.

Brown & Brown operates in the high-margin, capital-light mid-market insurance brokerage market while taking little underwriting risk. The company’s scale and a strong record of mergers and acquisitions position it well for strong returns across economic cycles, including periods of high inflation and interest rates.”

A successful independent agent or broker discussing the benefits of life and health insurance with a customer.

Brown & Brown, Inc. (NYSE:BRO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Brown & Brown, Inc. (NYSE:BRO) at the end of the first quarter, which was 39 in the previous quarter. While we acknowledge the potential of Brown & Brown, Inc. (NYSE:BRO) 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 undervalued AI stock set for massive gains.

In another article, we covered Brown & Brown, Inc. (NYSE:BRO) and shared The BBH Select Series – Mid Cap Fund’s views on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of BRO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.