Wedgewood Partners Trimmed Taiwan Semiconductor Manufacturing Company (TSM) in Q3 as It Re-Rated Higher

Wedgewood Partners, an investment management company, released its third-quarter 2025 investor letter. The letter is available for download here.  AI stocks remain the favorite topic of Wall Street in the third quarter. In the third quarter, Wedgewood Composite’s net return was 5.9% compared to the Standard & Poor’s 8.1%, the Russell 1000 Growth Index’s 10.5%, and the Russell 1000 Value Index’s 5.3% return for the same period. In addition, you can check the fund’s best 5 holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Wedgewood Partners highlighted stocks such as Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures, packages, tests, and sells integrated circuits and other semiconductor devices. The one-month return of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was 4.92%, and its shares gained 46.62% of their value over the last 52 weeks. On October 21, 2025, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stock closed at $294.51 per share, with a market capitalization of $1.527 trillion.

Wedgewood Partners stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its third quarter 2025 investor letter:

"Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was also a leading contributor to performance during the third quarter (as well as the past few years). Approximately 60% of the Company's revenue is generated from manufacturing AI and high-performance computing (HPC) chips for leading semiconductor design companies, including Nvidia, Apple, Broadcom, Meta, Amazon and Alphabet. The Company offers the most manufacturing capacity at leading-edge nodes, a capability in high-demand as it enables customers to design more power-ef icient chips against a backdrop of increasingly power-constrained data centers. The Company’s execution over the past several years has been nearly lawless, providing its customers with significant benefits in planning multi-year road maps that the entire IT industry is now adopting. The stock recently re-rated higher, exceeding our 10% maximum portfolio weight. As a result, we slightly trimmed our positions during the quarter."

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is in 9th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 187 hedge fund portfolios held Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the end of the second quarter, consistent with previous quarter. While we acknowledge the potential of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) 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 Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and shared the list of AI stocks in the spotlight. 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.