Portillo's (PTLO) Fell as Results Fell Short of Expectations

Fred Alger Management, an investment management company, released its “Alger Small Cap Focus Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S. equity markets continued their upward trajectory in the third quarter with the S&P 500 Index rising 8.12%. A combination of improving economic conditions, solid corporate earnings, and growing expectations for monetary easing propelled the robust equity market. Against this backdrop, the class A shares of the fund underperformed the Russell 2000 Growth Index. 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, Alger Small Cap Focus Fund highlighted stocks such as Portillo’s Inc. (NASDAQ:PTLO). Portillo’s Inc. (NASDAQ:PTLO) is a US-based restaurant operator. The one-month return of Portillo’s Inc. (NASDAQ:PTLO) was -2.80%, and its shares lost 54.44% of their value over the last 52 weeks. On November 27, 2025, Portillo’s Inc. (NASDAQ:PTLO) stock closed at $5.21 per share, with a market capitalization of $374.767 million.

Alger Small Cap Focus Fund stated the following regarding Portillo’s Inc. (NASDAQ:PTLO) in its third quarter 2025 investor letter:

"Portillo’s Inc. (NASDAQ:PTLO) is a fast-casual restaurant chain best known for Chicago-style hot dogs and Italian beef sandwiches, operating company-owned locations across the United States. During the quarter, shares detracted from performance after the company reported weaker-than-expected fiscal second-quarter results. Management also reduced full-year guidance for same-restaurant sales, citing softer traffic and underperformance at some newer restaurants. In our view, concerns about slower same-store momentum, moderated development pace, and industry pricing/promotional pressure overshadowed the brand’s longer-term expansion narrative."

Portillo’s Inc. (NASDAQ:PTLO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held Portillo’s Inc. (NASDAQ:PTLO) at the end of the third quarter, which was 26 in the previous quarter. In the third quarter of 2025, Portillo’s Inc. (NASDAQ:PTLO) reported revenue of $181.4 million, reflecting an increase of $3.2 million compared to Q3 2024. While we acknowledge the potential of Portillo’s Inc. (NASDAQ:PTLO) 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 Portillo’s Inc. (NASDAQ:PTLO) and shared Middle Coast Investing's views 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.