Here's Why ClearBridge Large Cap Growth Strategy Sold Union Pacific Corporation (UNP) in Q3

ClearBridge Investments, an investment management company, released its “ClearBridge Large Cap Growth Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equities continued their upward journey in the third quarter with the S&P 500 Index surging 8.1% and tech-heavy Nasdaq Composite rising 11.2% to record highs. Investor optimism was driven by favorable tariff results, the One Big Beautiful Bill in July, expected interest rate cuts, and strong corporate earnings, particularly in technology and the Magnificent Seven. The benchmark Russell 1000 Growth Index rose 10.5% for the quarter. The strategy delivered solid absolute performance in the quarter but underperformed the benchmark. Underexposure to perceived AI winners and holding several names deemed by investors to be AI losers led to the underperformance. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, ClearBridge Large Cap Growth Strategy highlighted stocks such as Union Pacific Corporation (NYSE:UNP). Union Pacific Corporation (NYSE:UNP) is a US-based railroad company. The one-month return of Union Pacific Corporation (NYSE:UNP) was 7.48%, and its shares lost 0.86% of their value over the last 52 weeks. On October 3, 2025, Union Pacific Corporation (NYSE:UNP) stock closed at $236.80 per share, with a market capitalization of $140.452 billion.

ClearBridge Large Cap Growth Strategy stated the following regarding Union Pacific Corporation (NYSE:UNP) in its third quarter 2025 investor letter:

"The purchase was partially funded with proceeds from the sale of Union Pacific Corporation (NYSE:UNP). We believe the merger between Union Pacific and Norfolk Southern will create an overhang on the cargo rail operator for some time, limiting the upside potential. Without a stronger freight environment, an area that has been in a multi-year recession, we do not expect the combined company will benefit as much from an expected industrials recovery."

Union Pacific Corporation (NYSE:UNP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 89 hedge fund portfolios held Union Pacific Corporation (NYSE:UNP) at the end of the second quarter, up from 85 in the previous quarter.  While we acknowledge the potential of UNION PACIFIC CORPORATION (NYSE:UNP) 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 Union Pacific Corporation (NYSE:UNP) and shared the list of best stocks to invest in for financial stability. 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.