Fred Alger Management, an investment management company, released its “Alger Small Cap Focus Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The US equity market ended the fourth quarter on a strong note, with the S&P surging 2.7%, maintaining its steady upward momentum. Investors’ optimism was supported by better-than-expected corporate earnings, the US Federal Reserve’s further interest rate easing stance, and a resilient macroeconomic backdrop. Improving clarity on trade policy provided additional support. Meanwhile, the quarter was characterized by increasing divergence below the index level surface. The enthusiasm for AI investment is facing growing doubts due to bottlenecks, financing challenges, and uncertainty over its ability to generate returns. The firm continues to observe secular trends that present attractive investment opportunities for small-cap stocks. In Q4 2025, Class A shares of the Fund outperformed the Russell 2000 Growth Index. The Utilities and Financials sectors contributed to the relative performance of the Fund in the quarter, while the Consumer Discretionary and Information Technology sectors detracted from performance. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Alger Small Cap Focus Fund highlighted stocks such as Natera, Inc. (NASDAQ:NTRA). Natera, Inc. (NASDAQ:NTRA) is a leading diagnostics and research company that engages in molecular testing services. The one-month return of Natera, Inc. (NASDAQ:NTRA) was -0.31%, and its shares gained 46.03% of their value over the last 52 weeks. On January 16, 2026, Natera, Inc. (NASDAQ:NTRA) stock closed at $231.25 per share, with a market capitalization of $32.248 billion.
Alger Small Cap Focus Fund stated the following regarding Natera, Inc. (NASDAQ:NTRA) in its fourth quarter 2025 investor letter:
“Natera, Inc. (NASDAQ:NTRA) is a specialty diagnostics laboratory that provides high-value genetic testing across three core franchises: reproductive health (including non-invasive prenatal testing for chromosomal conditions such as trisomy 13, 18, and 21), oncology (led by Signatera, which measures circulating tumor DNA to assess treatment response and detect molecular residual disease and cancer recurrence), and transplant (tests used to monitor organ rejection). These tests are built on the company’s proprietary cell-free DNA liquid biopsy platform, enabling highly sensitive detection from a blood sample. Shares contributed positively after the company reported strong fiscal third-quarter earnings, with management commentary pointing to revenue and margin performance that exceeded expectations on the back of higher test volumes and favorable reimbursement dynamics— particularly within the Signatera franchise—alongside another increase to full-year 2025 revenue and margin guidance.”
Natera, Inc. (NASDAQ:NTRA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 70 hedge fund portfolios held Natera, Inc. (NASDAQ:NTRA) at the end of the third quarter, up from 66 in the previous quarter. In Q3 2025, Natera, Inc. (NASDAQ:NTRA) generated $592 million in revenue, which is up about 35% compared to Q3 2024. While we acknowledge the risk and potential of Natera, Inc. (NASDAQ:NTRA) 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 Natera, Inc. (NASDAQ:NTRA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Natera, Inc. (NASDAQ:NTRA) and shared the list of high growth large cap stocks to buy. 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.
