Broyhill Views Avantor (AVTR) as a Costly Mistake. Here's Why

Broyhill Asset Management, an investment advisor, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. 2025 witnessed extreme market concentration and a strong focus on artificial intelligence, leaving many sectors behind. The Portfolio, which has been significantly reshaped, now trades at a substantial discount relative to the broader market. The firm strongly believes it will benefit as market fundamentals improve. For the year, the portfolio declined by 1.4%, underperforming the MSCI ACWI's 22.9% return. Momentum has dominated equity markets, with performance driven more by narratives than fundamentals. The firm admits the risks of being different but will remain contrarian and strategic, adapting more quickly to changing facts. In addition, please check the Portfolio’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Broyhill Asset Management highlighted stocks like Avantor, Inc. (NYSE:AVTR). Headquartered in Radnor, Pennsylvania, Avantor, Inc. (NYSE:AVTR) provides mission-critical products and services to biotechnology, education, and pharmaceutical companies. On February 25, 2026, Avantor, Inc. (NYSE:AVTR) stock closed at $9.06 per share. One-month return of Avantor, Inc. (NYSE:AVTR) was -16.19%, and its shares lost 45.06% over the past 52 weeks. Avantor, Inc. (NYSE:AVTR) has a market capitalization of $6.18 billion.

Broyhill Asset Management stated the following regarding Avantor, Inc. (NYSE:AVTR) in its fourth quarter 2025 investor letter:

"Our mistakes were costly. Our largest detractors were Avantor, Inc. (NYSE:AVTR), Fiserv, and Six Flags. Losers also shared a common thread: financial leverage amplified by execution missteps. Avantor was our biggest detractor from performance on the year. When we initiated the position, we underwrote a classic recovery setup: orders bottom, gradually recover, and earnings inflect. While this cycle has played out longer than we initially expected, with uncertainty magnified by unpredictable government policy, the industry upturn has become increasingly difficult to ignore. The issue for Avantor has been that a cyclical downturn morphed into competitive and operational challenges, with company-specific execution masking the industry upturn. Consequently, we cut the position in half after the company announced management changes and second-quarter results that again fell short of our expectations, and reinvested the proceeds into Thermo Fisher, the primary beneficiary of Avantor’s challenges. We continue to maintain our reduced position in the company as we view AVTR as a rare strategic asset with multiple self-help levers, with the option of a strategic sale should those levers fail to impress recently engaged activists. In the meantime, the group remains under-owned with substantial capital on the sidelines still looking for an entry point, while revenues are reaccelerating, reshoring investments are set to provide incremental upside, and recent agreements between big pharma and the current administration have removed much of the downside risk associated with policy headwinds."

Avantor, Inc. (NYSE:AVTR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 40 hedge fund portfolios held Avantor, Inc. (NYSE:AVTR) at the end of the fourth quarter, compared to 50 in the previous quarter. While we acknowledge the potential of Avantor, Inc. (NYSE:AVTR) 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 Avantor, Inc. (NYSE:AVTR) and shared a list of most undervalued mid cap stocks to buy. In addition, please check out our hedge fund investor letters Q4 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.