Longleaf Partners Fund Believes PayPal Holdings (PYPL) Has a Compelling Path Forward

Longleaf Partners, managed by Southeastern Asset Management, released its “Partners Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned -5.14% in the first quarter, compared to the S&P 500’s -4.27% return and Russell 1000 Value’s 2.14% return. The firm’s stock price performance was volatile, but its confidence in future returns grew as the quarter progressed. The firm invested in quality companies that it thinks are strong and resilient to difficult circumstances. The portfolio has significantly outperformed the index, demonstrating this resiliency since the market peak on February 19^th. The rise of its underlying value per share outpaced the performance of the stock price during the quarter. For more information on the fund’s best picks in 2025, please check its top five holdings.

In its first-quarter 2025 investor letter, Longleaf Partners Fund highlighted stocks such as PayPal Holdings, Inc. (NASDAQ:PYPL). PayPal Holdings, Inc. (NASDAQ:PYPL) is a technology platform that enables digital payments.  The one-month return of PayPal Holdings, Inc. (NASDAQ:PYPL) was -12.44%, and its shares lost 1.77% of their value over the last 52 weeks. On April 17, 2025, PayPal Holdings, Inc. (NASDAQ:PYPL) stock closed at $61.00 per share with a market capitalization of $60.344 billion.

Longleaf Partners Fund stated the following regarding PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q1 2025 investor letter:

"PayPal Holdings, Inc. (NASDAQ:PYPL) – Digital payments platform PayPal was a detractor for the quarter. The stock price declined significantly more than the few percentage points decline in our appraisal value after mildly disappointing results. Growth was in the mid-single-digit range when the market was hoping for high-single-digits. While we trimmed part of our position early in the quarter, in hindsight a larger reduction would have been prudent. However, we continue to see a compelling path forward for this high-quality business, which is still not optimized under relatively new CEO Alex Chriss."

PayPal Holdings, Inc. (NASDAQ:PYPL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 94 hedge fund portfolios held PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of the fourth quarter which was 90 in the previous quarter. While we acknowledge the potential of PayPal Holdings, Inc. (NASDAQ:PYPL) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we covered PayPal Holdings, Inc. (NASDAQ:PYPL) and shared Wedgewood Partners' views on the company. In addition, please check out our hedge fund investor letters Q1 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.