Should You Hold AAR Corp. (AIR)?

Fred Alger Management, an investment management company, released its “Alger Weatherbie Specialized Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund focuses on investing in a portfolio of 50 small and mid-cap companies with promising growth potential. 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’s surface. While AI remains the market’s biggest tailwind, it is being scrutinized for funding, limitations, and potential to return investment. The firm continues to observe secular trends that present attractive investment opportunities.  Furthermore, U.S. business spending appears to be rising due to rising demand for AI infrastructure and tax incentives from the One Big Beautiful Bill. Against this backdrop, Class A shares of the Fund underperformed the Russell 2500 Growth Index in Q4 2025. The Real Estate and Consumer Staples contributed to the relative performance of the Fund in the quarter, while the Information Technology and Health Care sectors detracted from the 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 Weatherbie Specialized Fund highlighted stocks such as AAR Corp. (NYSE:AIR). AAR Corp. (NYSE:AIR) provides products and services to commercial aviation, government, and defense markets. The one-month return of AAR Corp. (NYSE:AIR) was 26.65%, and its shares gained 52.76% of their value over the last 52 weeks. On January 22, 2026, AAR Corp. (NYSE:AIR) stock closed at $107.74 per share with a market capitalization of $4.264 billion.

Alger Weatherbie Specialized Fund stated the following regarding AAR Corp. (NYSE:AIR) in its fourth quarter 2025 investor letter:

“AAR Corp. (NYSE:AIR) is a global aerospace and defense aftermarket services provider that supports commercial airlines and government customers through parts distribution and supply-chain solutions, as well as maintenance, repair, and overhaul services—an area we believe is structurally supported by high aircraft utilization and an aging fleet. During the quarter, shares detracted from performance amid investor uncertainty following the company’s early-December announcement of a Chief Financial Officer transition; however, we believe underlying demand trends across AAR’s end markets remain healthy.”

AAR Corp. (NYSE:AIR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 28 hedge fund portfolios held AAR Corp. (NYSE:AIR) at the end of the third quarter, up from 23 in the previous quarter. In the second quarter of fiscal 2026, AAR Corp.’s (NYSE:AIR) total sales grew 16% year over year to $795 million. While we acknowledge the risk and potential of AAR Corp. (NYSE:AIR) 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 AAR Corp. (NYSE:AIR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered AAR Corp. (NYSE:AIR) and shared the list of stocks Jim Cramer discussed. 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.