Here's How the Separation of Its Freight Unit Affects FedEx Corporation (FDX)

Longleaf Partners, managed by Southeastern Asset Management, released its “Partners Fund” third-quarter 2025 investor letter. The letter can be downloaded here. The fund returned -0.33% in the third quarter, compared to the S&P 500’s 8.12 % return and the Russell 1000 Value’s 5.33% return. The firm is not happy with the flat performance of the portfolio, emphasizing its investments in real assets and brands that generate growing free cash flow (FCF) per share. Despite facing market pressures from speculation and government uncertainty, it anticipates that the Fund's ~10x FCF multiple could rise to the mid-teens as management implements strategies to improve margins and increase share repurchases. For more information on the fund’s best picks in 2025, please check its top five holdings.

In its third-quarter 2025 investor letter, Longleaf Partners Fund highlighted stocks such as FedEx Corporation (NYSE:FDX). Founded in 1971, FedEx Corporation (NYSE:FDX) provides transportation, e-commerce, and business services. The one-month return of FedEx Corporation (NYSE:FDX) was 1.44%, and its shares lost 11.34% of their value over the last 52 weeks. On October 23, 2025, FedEx Corporation (NYSE:FDX) stock closed at $238.17 per share, with a market capitalization of $56.925 billion.

Longleaf Partners Fund stated the following regarding FedEx Corporation (NYSE:FDX) in its third quarter 2025 investor letter:

"FedEx Corporation (NYSE:FDX): Similar to Kraft Heinz, the market is focused on the recent challenging macro environment. In spite of the macro, we have been pleased to see FDX’s focus on operational improvements. We expect the company’s separation next year of its Freight unit to be a highly impactful event for both value realization and long-term value per share growth at both companies, as their values can sum to over $350 per share."

FedEx Corporation (NYSE:FDX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 67 hedge fund portfolios held FedEx Corporation (NYSE:FDX) at the end of the second quarter, up from 62 in the previous quarter. FedEx Corporation's (NYSE:FDX) revenue increased by 3% year-over-year, driven by strength in its U.S. domestic package services. While we acknowledge the potential of FedEx Corporation (NYSE:FDX) 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 FedEx Corporation (NYSE:FDX) and shared the list of stocks Jim Cramer discussed. 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.