Latitude Investment Management, an investment management firm, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The letter emphasizes a long-term, fundamentals-driven investment philosophy, arguing that while stock prices can be volatile in the short run, they ultimately follow underlying earnings growth—illustrated through the “dog and owner” analogy. The portfolio delivered strong results in 2025, with earnings growing over 15% and returns of 21%, largely driven by consistent fundamental growth rather than valuation changes. The manager highlights a diversified portfolio of high-quality, cash-generative companies with solid market positions, low investment needs, and attractive shareholder returns through dividends and buybacks. The letter notes selective portfolio shifts toward more defensive, attractively valued names while maintaining double-digit growth potential. Looking ahead, the outlook remains positive, with expectations for continued earnings growth, improving opportunities from market dispersion, and attractive valuations providing a margin of safety despite limited exposure to crowded themes like AI. In addition, please check the Fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Latitude Investment Management highlighted stocks like McKesson (NYSE:MCK). McKesson (NYSE:MCK) is a global healthcare company specializing in pharmaceutical distribution and supply chain solutions. The one-month return of McKesson (NYSE:MCK) was -11.46% while its shares traded between $637.00 and $999.00 over the last 52 weeks. On May 15, 2026, McKesson (NYSE:MCK) stock closed at approximately $760.57 per share, with a market capitalization of about $91.4 billion.
Latitude Investment Management stated the following regarding McKesson (NYSE:MCK) in its Q4 2025 investor letter:
“In our research process, we pay no attention to valuation. The sole focus is determining the earnings power of a business and assessing the attributes which support our outlook. However, when choosing where to allocate capital within the strategy, we pay a lot of attention to valuation. This approach occasionally leads us towards those firms and industries with strong potential but short-term headwinds. This can be a profitable approach when valuations excessively reflect the present concerns, incorrectly valuing the long-term prospects. We believe this is currently the case within pockets of the healthcare sector.
We started to see this opportunity in 2022, when we first invested in McKesson (NYSE:MCK), a drug distribution company. The stocks produced returns of roughly 50% last year, driven by strong fundamental value growth of around 20% and some re-rating on top. The distribution model has proven its strong resilience, with companies having meaningfully reduced their dependence on drug pricing (by moving to fixed cost as opposed to percentage cost contracts) in the past decade. They are in effect a toll road on the US healthcare system and the opposite of economic rent-seeking businesses, creating huge value for the system while only earning a very small fraction of the industry profit pool (c.1%). While growing profits, they have also invested heavily in both technology and infrastructure, embedding their market positions at the centre of the US healthcare system.”
Africa Studio/Shutterstock.com
McKesson (NYSE:MCK) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 72 hedge fund portfolios held McKesson (NYSE:MCK) at the end of the fourth quarter, which was 73 in the previous quarter. While we acknowledge the risk and potential of McKesson (NYSE:MCK) 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 McKesson (NYSE:MCK) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered McKesson (NYSE:MCK) and shared the list of cash-rich dividend stocks to invest in right now. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.
Disclosure: None. This article is originally published at Insider Monkey.
