ClearBridge Large Cap Growth Strategy Benefitted from its Underweight Exposure in Tesla (TSLA)

ClearBridge Investments, an investment management company, released its “ClearBridge Large Cap Growth Strategy” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The majority of growth indexes entered correction territory during the quarter, due to pressure from the chaotic tariff implementation, concerns about a weakening U.S. economy, and increased inflation. Against this backdrop, the strategy outperformed the benchmark, driven by diversified stock selection and an underweight exposure to the Magnificent Seven. The S&P 500 Index declined 4.27% in the quarter and the benchmark Russell 1000 Growth Index (RLG) fell 9.97%. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first quarter 2025 investor letter, ClearBridge Large Cap Growth Strategy emphasized stocks such as Tesla, Inc. (NASDAQ:TSLA). Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, leases, and sells electric vehicles, as well as energy generation and storage systems. The one-month return of Tesla, Inc. (NASDAQ:TSLA) was 1.18%, and its shares gained 31.89% of their value over the last 52 weeks. On April 8, 2025, Tesla, Inc. (NASDAQ:TSLA) stock closed at $233.29 per share with a market capitalization of $750.382 billion.

ClearBridge Large Cap Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q1 2025 investor letter:

“Our active underweight to the Magnificent Seven added more than 100 basis points to relative returns for the quarter, with underweights to EV maker Tesla, Inc. (NASDAQ:TSLA) and Google parent Alphabet being among the largest relative contributors. We added to both positions, taking advantage of what we view as short-term weakness as Alphabet missed high expectations for cloud revenue growth in its latest quarter, while Tesla worked through negative sentiment over CEO Elon Musk’s role in the Trump administration.”

Tesla, Inc. (NASDAQ:TSLA) is in 23rd position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 126 hedge fund portfolios held Tesla, Inc. (NASDAQ:TSLA) at the end of the fourth quarter compared to 99 in the third quarter. While we acknowledge the potential of Tesla, Inc. (NASDAQ:TSLA) 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.

We covered Tesla, Inc. (NASDAQ:TSLA) in another article, where we shared the list of AI stocks in the spotlight. 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.