Sustainable Growth Advisers (SGA), an investment management company, released its third-quarter investor letter for its “U.S. Large Cap Growth Strategy.” A copy of the letter can be downloaded here. The portfolio returned -1.3% (Gross) and -1.4% (Net) in the third quarter, compared to a 10.5% return for the Russell 1000 Growth Index and an 8.1% return for the S&P 500 Index. SGA’s investment objective is to invest in high-quality growth businesses expected to achieve consistent mid-teens earnings growth, accompanied by stable revenue and cash flow. However, in Q3, the market leadership was adverse for SGA’s investment style as lower-quality stocks and cyclical industries outperformed. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its third-quarter 2025 investor letter, the SGA U.S. Large Cap Growth Strategy highlighted stocks such as W.W. Grainger, Inc. (NYSE:GWW). W.W. Grainger, Inc. (NYSE:GWW) distributes maintenance, repair, and operating products and services. The one-month return of W.W. Grainger, Inc. (NYSE:GWW) was 4.14%, and its shares lost 3.14% of their value over the last 52 weeks. On December 31, 2025, W.W. Grainger, Inc. (NYSE:GWW) stock closed at $1,009.05 per share, with a market capitalization of $48.265 billion.
SGA U.S. Large Cap Growth Strategy stated the following regarding W.W. Grainger, Inc. (NYSE:GWW) in its third quarter 2025 investor letter:
“W.W. Grainger, Inc. (NYSE:GWW) is a leading broad line distributor of maintenance, repair, and operating (MRO) products, with operations primarily in North America, Japan, and the United Kingdom. The company serves over 4.5 million customers and operates approximately 250 branches across the U.S., Canada, South America, and the UK. Grainger offers more than 2 million MRO products in its High-Touch Solutions segment and over 30 million products through its comprehensive online channels, including Zoro in the U.S. and MonotaRO in Japan. Grainger’s high-touch business model enables strong pricing power by embedding services like inventory management, consulting, and onsite support directly into customer operations, with over 60% of revenue coming from customers with at least one embedded solution. This deep integration creates value beyond purchase and procurement, making Grainger a trusted partner and differentiating it in the MRO distribution space. The company generates resilient, repeatable revenue through its mission-critical product offerings and seamless digital procurement platforms, driving consistent demand and dependable cash flow even in volatile economic environments. Grainger is positioned to gain share in a large B2B supply market, benefiting from trends such as manufacturing reshoring, industry consolidation, and accelerated digital adoption. Its dual-channel model, combining high-touch service with a broad online assortment, allows it to serve both complex and transactional buyers, supporting long-term growth.
The B2B industrial distribution market remains highly fragmented, positioning Grainger to capitalize on industry consolidation through its superior digital capabilities and robust supply chain infrastructure. In the near-term, we anticipate gross margin expansion as Grainger effectively passes tariff-related costs to customers, supporting a double-digit shareholder return despite volume pressures from tariff uncertainty. Over the medium to long-term, we project consistent annual market share gains of 3-4%, driven by continued industry consolidation and favorable macro trends such as manufacturing reshoring and supply chain automation. These dynamics are expected to fuel a broader industrial volume recovery, underpinning healthy revenue growth and sustaining double-digit annual returns over our 3-5 year investment horizon.…” (Click here to read the full text)
W.W. Grainger, Inc. (NYSE:GWW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 46 hedge fund portfolios held W.W. Grainger, Inc. (NYSE:GWW) at the end of the third quarter, compared to 55 in the previous quarter. W.W. Grainger, Inc. (NYSE:GWW) reported sales of $4.7 billion in Q3 2025, up 6.1% on a reported basis or 5.4% on a daily constant currency basis. While we acknowledge the risk and potential of W.W. Grainger, Inc. (NYSE:GWW) 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 W.W. Grainger, Inc. (NYSE:GWW) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered W.W. Grainger, Inc. (NYSE:GWW) and shared Parnassus Core Equity Fund’s views on the company. In addition, please check out our hedge fund investor letters Q3 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.
