Sustainable Growth Advisers (SGA), an investment management company, released its third-quarter investor letter for its “U.S. Large Cap Growth Strategy.” A copy of the letter can be downloaded here. The portfolio returned -1.3% (Gross) and -1.4% (Net) in the third quarter, compared to a 10.5% return for the Russell 1000 Growth Index and an 8.1% return for the S&P 500 Index. SGA’s investment objective is to invest in high-quality growth businesses expected to achieve consistent mid-teens earnings growth, accompanied by stable revenue and cash flow. However, in Q3, the market leadership was adverse for SGA’s investment style as lower-quality stocks and cyclical industries outperformed. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its third-quarter 2025 investor letter, the SGA U.S. Large Cap Growth Strategy highlighted stocks such as Gartner, Inc. (NYSE:IT). Established in 1979, Gartner, Inc. (NYSE:IT) is a research and advisory company that operates through research, conferences, and consulting segments. The one-month return of Gartner, Inc. (NYSE:IT) was 8.69%, and its shares lost 47.80% of their value over the last 52 weeks. On December 31, 2025, Gartner, Inc. (NYSE:IT) stock closed at $252.28 per share, with a market capitalization of $19.107 billion.
SGA U.S. Large Cap Growth Strategy stated the following regarding Gartner, Inc. (NYSE:IT) in its third quarter 2025 investor letter:
“Gartner, Inc. (NYSE:IT was a detractor during the quarter after reporting Q2 results where contract value growth slowed to 5% from 7% in Q1 and caused the company to reduce its revenue growth guidance for the year. While we had expected growth to decelerate due to the DOGE impact on its U.S. federal government customers, its growth excluding federal government customers also weakened as tariff uncertainty delayed decision making and drove incremental budget pressures for its customers. This coincided with a new market narrative that Gartner’s value proposition would be disrupted by generative AI which further weighed on the stock.
We are disappointed in the near-term results but remain confident in the long-term opportunity for Gartner. Gartner has established itself as a leading and trusted advisor to IT executives with dominant market share whose subscriptions, which represent a very small fraction of an overall IT budget, deliver significant value to its customers. This value proposition has only increased over time as technology’s importance, scope, and complexity have all grown which drives secular tailwinds for the business. We believe the advent of generative AI and the potentially transformative impact it will have for all companies’ operations represents another wave of technological disruption that will lend itself toward Gartner’s solutions as IT leaders around the world try to determine how to harness this new technology. Competition from cheaper alternatives is not new to Gartner and customers have long demonstrated a willingness to pay a premium for its research quality which is unmatched in terms of the breadth and depth of insights and its brand predicated on independence and objectivity. Additionally, about 90% of its contract value is tied to subscriptions that include unlimited access to Gartner’s analysts and tickets to its conferences that provide a strong, differentiated value proposition to its clients that would be very difficult to replicate. Only 10% are in the reference “read-only” tier that could become more commoditized due to advancements in generative AI but would still hold value due to its quality and objectivity. While we have tempered our near-term assumptions to reflect the more challenging environment, we believe these headwinds will prove transitory and expect growth to reaccelerate. Even under conservative scenarios, we see a compelling investment opportunity longer-term and used the weakness to add to the position.”
Gartner, Inc. (NYSE:IT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Gartner, Inc. (NYSE:IT) at the end of the third quarter, which was 45 in the previous quarter. In the third quarter of 2025, Gartner, Inc. (NYSE:IT) reported revenue of $1.5 billion, reflecting an increase of 3% year-over-year as reported and 1% FX neutral. While we acknowledge the risk and potential of Gartner, Inc. (NYSE:IT) 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 Gartner, Inc. (NYSE:IT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Gartner, Inc. (NYSE:IT) and shared TCW Concentrated Large Cap Growth Fund. In addition, please check out our hedge fund investor letters Q3 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.
