ClearBridge Mid Cap Growth Strategy Exited Palantir Technologies (PLTR) as It Left the Benchmark

ClearBridge Investments, an investment management company, released its “ClearBridge Mid Cap Growth Strategy” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Following the soft start to the year, the midcap fund rebounded in the second quarter, driven by demand for AI and a low-quality rally, which enabled the growth stocks to overcome the tariff-led uncertainty. The strategy failed to outpace the benchmark, despite strong absolute returns, due to limited exposure to several of the rally’s leading participants. However, the firm is optimistic about the ability of the mid-cap growth universe to offer attractive long-term compounders. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, ClearBridge Mid Cap Growth Strategy highlighted stocks such as Palantir Technologies Inc. (NASDAQ:PLTR). Palantir Technologies Inc. (NASDAQ:PLTR) builds and deploys software platforms for the intelligence community.  The one-month return of Palantir Technologies Inc. (NASDAQ:PLTR) was -1.03%, and its shares gained 405.55% of their value over the last 52 weeks. On August 27, 2025, Palantir Technologies Inc. (NASDAQ:PLTR) stock closed at $156.72 per share, with a market capitalization of $371.793 billion.

ClearBridge Mid Cap Growth Strategy stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its second quarter 2025 investor letter:

"Despite strong absolute returns, the ClearBridge Mid Cap Growth Strategy failed to keep pace with its benchmark in the second quarter due to limited exposure to several of the rally’s leading participants - Palantir Technologies Inc. (NASDAQ:PLTR) and Cloudflare in information technology (IT), Axon in industrials and Roblox in communication services. Palantir, which has been a highly controversial stock due to excessive valuation and strong retail participation, rose 55% during the quarter, driven by the AI and growth-led rally and heightened attention to security. This proved a significant headwind for relative Strategy performance, but it could have been several times that amount had the team not initiated a modest position as a risk management strategy. We exited Palantir as it left the benchmark at the end of the quarter."

Palantir Technologies Inc. (NASDAQ:PLTR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 78 hedge fund portfolios held Palantir Technologies Inc. (NASDAQ:PLTR) at the end of the second quarter, which was 77 in the previous quarter. While we acknowledge the potential of Palantir Technologies Inc. (NASDAQ:PLTR) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Palantir Technologies Inc. (NASDAQ:PLTR) and shared the list of fastest growing tech stocks to invest in. In addition, please check out our hedge fund investor letters Q2 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.