Here's Why Arthur J. Gallagher (AJG) Outperformed in Q1

Qualivian Investment Partners, an investment partnership focused on long-only public equities, released its Q1 2025 investor letter. A copy of the letter can be downloaded here. The fund outperformed the iShares MSCI USA Quality Factor ETF (QUAL) by 66.0% and 59.4% on a gross and net basis, since inception through March 31, 2025. It also exceeded the S&P 500 by 32.7% and 26.1% respectively, on a gross and net basis. In Q1 2025, the fund outperformed QUAL by 5.3% and 5.2% on a gross and net basis, and we outperformed the S&P 500 by 5.2% and 5.1% on a gross and net basis. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Qualivian Investment Partners highlighted stocks such as Arthur J. Gallagher & Co. (NYSE:AJG). Arthur J. Gallagher & Co. (NYSE:AJG) provides insurance and reinsurance brokerage, consulting, and third-party property/casualty claims settlement and administration services. The one-month return of Arthur J. Gallagher & Co. (NYSE:AJG) was -7.28%, and its shares gained 22.18% of their value over the last 52 weeks. On June 30, 2025, Arthur J. Gallagher & Co. (NYSE:AJG) stock closed at $320.12 per share, with a market capitalization of $81.968 billion.

Qualivian Investment Partners stated the following regarding Arthur J. Gallagher & Co. (NYSE:AJG) in its Q1 2025 investor letter:

"Arthur J. Gallagher & Co. (NYSE:AJG) and BRO are P&C insurance brokers that serve small and medium-sized businesses. They are one of the larger brokers serving this customer segment. Many smaller brokers cannot afford the technology investment required (primarily in customer relationship management and risk management/pricing software areas) and do not have the product breadth to be competitive. They are losing share to AJG and BRO and many are being consolidated by these firms on an economically accretive basis. Both firms are led by members of the founding family. We see both firms as secular quality compounders for the foreseeable future.

AJG and BRK.B benefited from their exposure to P&C insurance in Q1 2025. P&C stocks outperformed in the quarter due to their defensive nature. AJG is the leading P&C insurance brokerage in the middle market, and BRK.B has substantial exposure to P&C insurance.

Arthur J. Gallagher & Co. (NYSE:AJG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 52 hedge fund portfolios held Arthur J. Gallagher & Co. (NYSE:AJG) at the end of the first quarter, which was 77 in the previous quarter. While we acknowledge the potential of Arthur J. Gallagher & Co. (NYSE:AJG) 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 undervalued AI stock set for massive gains.

In another article, we covered Arthur J. Gallagher & Co. (NYSE:AJG) and shared the list of best insurance stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of NOW 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.

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