Here's the RS Large Cap Value Strategy's Views on Valero Energy Corporation (VLO)

RS Investments, an investment management company, released its “RS Large Cap Value Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The strategy underperformed the benchmark, Russell 1000 Value Index, in the quarter, returning 4.47% net vs 5.33% for the Index. Adverse stock selection in the Consumer Discretionary and Consumer Staples sectors impacted the portfolio’s performance in the quarter. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, RS Large Cap Value Strategy highlighted stocks such as Valero Energy Corporation (NYSE:VLO). Valero Energy Corporation (NYSE:VLO) manufactures and distributes petroleum-based and low-carbon liquid transportation fuels and petrochemical products. The one-month return of Valero Energy Corporation (NYSE:VLO) was 2.40%, and its shares gained 36.34% of their value over the last 52 weeks. On October 27, 2025, Valero Energy Corporation (NYSE:VLO) stock closed at $174.35 per share, with a market capitalization of $53.178 billion.

RS Large Cap Value Strategy stated the following regarding Valero Energy Corporation (NYSE:VLO) in its third quarter 2025 investor letter:

"Valero Energy Corporation (NYSE:VLO) is a multinational manufacturer and marketer of liquid transportation fuels. The company owns 15 petroleum refineries in the U.S., Canada and the U.K. and 12 ethanol plants in the U.S., and it is a joint venture partner in an operation producing renewable diesel. Given the capital intensity of the business, VLO focuses on optimizing its return on invested capital and producing strong free cash flow through a business cycle. In the third quarter, the company produced strong shareholder returns for a few reasons. First, it operated its assets exceptionally well and returned excess capital to shareholders. Second, the company has a structural advantage through U.S. natural gas which allows the company to have a lower cost base relative to many refiners in other parts of the world. Finally, recent industry consolidation and the closure of high-cost refineries in the United States have resulted in additional economic value accruing to Valero. We continue to hold VLO and believe that the shares will provide additional outperformance for our funds."

Valero Energy Corporation (NYSE:VLO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 55 hedge fund portfolios held Valero Energy Corporation (NYSE:VLO) at the end of the second quarter, the same as in the previous quarter.  While we acknowledge the potential of Valero Energy Corporation (NYSE:VLO) 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 Valero Energy Corporation (NYSE:VLO) and shared a bullish thesis 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.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.