Chewy (CHWY) Slid Due to Increased Growth Investments

ClearBridge Investments, an investment management company, released its “ClearBridge Mid Cap Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In an environment of shifting monetary policy, stabilizing earnings, and improved sentiment, midcaps experienced growth in the third quarter. The Federal Reserve’s decision to cut rates helped small and mid-cap stocks in the quarter. Value stocks outperformed their growth counterparts with the Russell Midcap Value Index returning 6.2% compared to the Russell Midcap Growth’s 2.8% return. In this environment, the strategy outperformed its Russell Midcap Index during the third quarter. Stock selection in the consumer staples and healthcare sectors drove outperformance of the strategy. 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 Mid Cap Strategy highlighted stocks such as Chewy, Inc. (NYSE:CHWY). Chewy, Inc. (NYSE:CHWY) is an online retailer that provides pet food and treats, pet supplies and pet medications, and other pet health products, as well as pet services. The one-month return of Chewy, Inc. (NYSE:CHWY) was -13.07%, and its shares gained 0.86% of their value over the last 52 weeks. On November 12, 2025, Chewy, Inc. (NYSE:CHWY) stock closed at $33.00 per share, with a market capitalization of $13.689 billion.

ClearBridge Mid Cap Strategy stated the following regarding Chewy, Inc. (NYSE:CHWY) in its third quarter 2025 investor letter:

"Stock selection in the consumer discretionary sector proved the greatest overall headwind. Chewy, Inc. (NYSE:CHWY), the e-commerce pet products and services retailer, declined despite solid revenue growth as the company’s increased growth investments for the second half of the year weighed on investor sentiment. However, we are confident in its strategic direction and believe these initiatives will increase the company’s recurring revenue and growth rate."

Chewy, Inc. (NYSE:CHWY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 58 hedge fund portfolios held Chewy, Inc. (NYSE:CHWY) at the end of the second quarter, up from 55 in the previous quarter. While we acknowledge the potential of Chewy, Inc. (NYSE:CHWY) 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 Chewy, Inc. (NYSE:CHWY) and shared the list of 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.