Sands Capital, an investment management company, released its “Sands Capital Select Growth Strategy” Q2 2025 investor letter. A copy of the letter can be downloaded here. U.S. large-cap growth equities recovered from a sharp sell-off in early April by delivering strong returns in the second quarter. The quarterly performance was driven by muted inflation, strong corporate earnings, and improving sentiment around artificial intelligence (AI) and global trade. The portfolio returned 27.7% in the quarter, outperforming the benchmark Russell 1000 Growth Index’s 17.8% gain. You can check the fund’s top 5 holdings to know more about its best picks for 2025.
In its second-quarter 2025 investor letter, Sands Capital Select Growth Strategy highlighted stocks such as Arthur J. Gallagher & Co. (NYSE:AJG). Arthur J. Gallagher & Co. (NYSE:AJG) provides insurance and reinsurance brokerage, consulting, and third-party property/casualty claims settlement and administration services. The one-month return of Arthur J. Gallagher & Co. (NYSE:AJG) was -3.85%, and its shares lost 2.21% of their value over the last 52 weeks. On September 15, 2025, Arthur J. Gallagher & Co. (NYSE:AJG) stock closed at $289.40 per share, with a market capitalization of $74.191 billion.
Sands Capital Select Growth Strategy stated the following regarding Arthur J. Gallagher & Co. (NYSE:AJG) in its second quarter 2025 investor letter:
“Arthur J. Gallagher & Co. (NYSE:AJG) is the largest middle-market commercial insurance broker in the United States by revenue. Commercial property rate declines weighed on AJG’s share price during the quarter, despite the company’s strong underlying performance. Rates fell 5 percent year over year in June, creating modest headwinds, though AJG’s business tends to have a natural offset from higher purchase volumes in softer pricing environments. This dynamic, along with a benign catastrophe season so far, explains the near-term reset in expectations. Still, the company delivered organic growth of 9.5 percent, outperforming peers on the back of strong execution in its brokerage segment and well-timed reinsurance placements. AJG also continued to scale its acquisition strategy, closing approximately $400 million in deals year to date and maintaining momentum ahead of its planned AssuredPartners acquisition.
The addition of AJG increases the portfolio’s exposure to compounder businesses and serves to mitigate portfolio risk, in our view, given its exposure to an economically insensitive end market (insurance) and ability to pass through inflation-driven price increases.
Arthur J. Gallagher (AJG) is the largest middle-market commercial insurance broker in the United States and the third-largest globally by revenue. The company connects thousands of insurance carriers with small and medium-sized businesses, earning commissions— typically 10 percent to 20 percent—on premiums without assuming underwriting risk. AJG drives growth through acquisitions, consolidating a highly fragmented industry with nearly 40,000 independent brokers in the United States. Its decentralized structure, with 10 regional hubs, enables efficient integration, in our view. The company enhances its profitability by leveraging analytics, workflow automation, and preferential carrier agreements. Recurring demand mitigates the risk to the commercial insurance industry because businesses require coverage regardless of economic conditions, which suits our compounder classification of businesses. AJG has sustained strong financial performance throughout economic cycles. While insurance rate increases are moderating post-pandemic, AJG remains well-positioned for long-term growth, in our view, supported by industry consolidation and technological advancements.”
Arthur J. Gallagher & Co. (NYSE:AJG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 62 hedge fund portfolios held Arthur J. Gallagher & Co. (NYSE:AJG) at the end of the second quarter, compared to 52 in the previous quarter. While we acknowledge the risk and potential of Arthur J. Gallagher & Co. (NYSE:AJG) 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 Arthur J. Gallagher & Co. (NYSE:AJG) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Arthur J. Gallagher & Co. (NYSE:AJG) and shared the list of stocks hedge funds are selling in 2025. 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.
