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 Royalty Pharma (NASDAQ:RPRX). Royalty Pharma (NASDAQ:RPRX) is a pharmaceutical company that acquires and manages royalty interests in innovative biopharma products. The one-month return of Royalty Pharma (NASDAQ:RPRX) was 7.20% while its shares traded between $32.15 and $53.47 over the last 52 weeks. On May 15, 2026, Royalty Pharma (NASDAQ:RPRX) stock closed at approximately $52.85 per share, with a market capitalization of about $30.44 billion.
Latitude Investment Management stated the following regarding Royalty Pharma (NASDAQ:RPRX) in its Q4 2025 investor letter:
“When sectors are hot, capital flows in with abandon, and the opposite is clearly true too. Funding for biotech and pharmaceutical companies, which ballooned in the years of abundant cheap capital, has since collapsed. Royalty Pharma (NASDAQ:RPRX) is filling the gap, and returns on capital are rising as a result. The company has a 40-50% market share of all pharma royalties6 and remains dominant today, despite attempts at competition from large private equity firms like Blackstone. The increased costs to bring a drug to market, and the absence of a credible alternative in equity and bond markets, mean that royalties become an increasingly attractive way of funding research. Barriers to entry are also high: relationships with pharma companies are built over decades, databases of successful trials and research require time to accumulate, and royalty holding periods are a lot longer than the lifespan of the average private equity fund, making them a less aggressive competitor. The company has shown great ability in diversifying its portfolio at solid double-digit returns and we were able to acquire the shares at a highly attractive entry point.”
Royalty Pharma (NASDAQ:RPRX) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 39 hedge fund portfolios held Royalty Pharma (NASDAQ:RPRX) at the end of the fourth quarter, which was 34 in the previous quarter. While we acknowledge the risk and potential of Royalty Pharma (NASDAQ:RPRX) 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 Royalty Pharma (NASDAQ:RPRX) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Royalty Pharma (NASDAQ:RPRX) and shared the list of Patient Opportunity Equity Strategy’s views on the company. 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.
