Giverny Capital Asset Management, LLC, an investment management company, recently published its fourth-quarter 2025 investor letter. A copy of the same can be downloaded here. The Portfolio returned 0.01% compared to 2.66% for the S&P 500. YTD, the fund returned 12.58% compared to 17.88% for the Index. The firm faced a challenging fourth quarter and calendar year, despite solid appreciation. The outperformance of a few large technology companies has negatively impacted performance, given the portfolio’s underweight in large tech and overweight in smaller niche leaders. While portfolio companies are excelling in earnings growth and capital returns, the market is fixated on AI investments, leaving the actual benefits unclear. Additionally, you can review the Portfolio’s top 5 holdings to see its best picks for 2025.
In its fourth-quarter 2025 investor letter, Giverny Capital Asset Management highlighted Align Technology, Inc. (NASDAQ:ALGN), which it exited during the year. Align Technology, Inc. (NASDAQ:ALGN) designs, manufactures, and markets Invisalign clear aligners and iTero intraoral scanners and services. The one-month return of Align Technology, Inc. (NASDAQ:ALGN) was 5.18%, and its shares lost 25.10% of their value over the last 52 weeks. On January 29, 2026, Align Technology, Inc. (NASDAQ:ALGN) stock closed at $164.12 per share, with a market capitalization of $11.896 billion.
Giverny Capital Asset Management stated the following regarding Align Technology, Inc. (NASDAQ:ALGN) in its fourth quarter 2025 investor letter:
” In the fourth quarter we exited CarMax, Fiserv and Align Technology. Align Technology, Inc. (NASDAQ:ALGN): The maker of Invisalign clear aligners, Align has a terrific product and should, over time, displace wires and brackets as the preferred way to straighten teeth. What is also clear to me, however, is that if clear aligners displace braces, they will also go some way to displacing orthodontists. The orthodontist community – well educated, highly trained and handsomely paid, prefers not to facilitate its own demise. With metal braces, the 5 orthodontist oversees treatment. With clear aligners, a digital scanner does. Few adults with crooked teeth would agree to wear braces, so Align essentially created a new market for adults that did not threaten orthodontists’ livelihood. Indeed, it continues to dominate the market for adult orthodontia.
While adults would not wear metal braces themselves, parents trust orthodontists to set a treatment plan for their children. I bought Align because I felt teens and their parents eventually would demand aligners. They are more comfortable, more aesthetically pleasing and as effective as braces. Yet, Align’s market share with teens remains low. I don’t know when the market will flip, given the resistance of many orthodontists to aligners. A secondary factor was my annoyance at excessive stock-based comp for a management team that generated poor returns for owners in recent years and consistently over-hyped its growth potential. I decided to move on despite my belief in the product.
Align Technology, Inc. (NASDAQ:ALGN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held Align Technology, Inc. (NASDAQ:ALGN) at the end of the third quarter, which was 54 in the previous quarter. In Q3 2025, Align Technology, Inc. (NASDAQ:ALGN) reported revenue of $995.7 million, down 1.7% from the prior quarter and up 1.8% from the corresponding quarter a year ago. While we acknowledge the risk and potential of Align Technology, Inc. (NASDAQ:ALGN) 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 Align Technology, Inc. (NASDAQ:ALGN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Align Technology, Inc. (NASDAQ:ALGN) and shared Artisan Mid Cap Value Fund’s views on the company in the previous quarter. 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.
