American Century Investments, an investment management company, released its third-quarter 2025 investor letter for the “American Century Investments Small Cap Value Fund.” A copy of the letter can be downloaded here. Equities rose strongly in the third quarter, with several hitting record highs. In the third quarter, the US Federal Reserve reduced its benchmark interest rate for the first time in the year. The portfolio aims to invest in small-cap companies that are undervalued and do not accurately represent their quality and potential earnings capability. The investor class of the fund returned 4.69% in the quarter, compared to 12.60% for the Russell 2000 Value Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its third-quarter 2025 investor letter, American Century Investments Small Cap Value Fund highlighted stocks such as Bath & Body Works, Inc. (NYSE:BBWI). Bath & Body Works, Inc. (NYSE:BBWI) is a specialty retailer that offers home fragrance, personal, and body care products. The one-month return for Bath & Body Works, Inc. (NYSE:BBWI) was 5.55%, and its shares lost 43.26% over the last 52 weeks. On January 2, 2026, Bath & Body Works, Inc. (NYSE:BBWI) stock closed at $20.74 per share, with a market capitalization of $4.276 billion.
American Century Investments Small Cap Value Fund stated the following regarding Bath & Body Works, Inc. (NYSE:BBWI) in its third quarter 2025 investor letter:
“Bath & Body Works, Inc. (NYSE:BBWI). We initiated a position in this retailer of fragrance and body care products for what we believed were its high margins and potential for rapid growth. We think the company’s low valuation should be temporary and that strong free cash flows can help mitigate risk as we wait for strategic initiatives to take hold.”
Bath & Body Works, Inc. (NYSE:BBWI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 49 hedge fund portfolios held Bath & Body Works, Inc. (NYSE:BBWI) at the end of the third quarter, compared to 56 in the previous quarter. While we acknowledge the potential of Bath & Body Works, Inc. (NYSE:BBWI) 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 Bath & Body Works, Inc. (NYSE:BBWI) and shared the list of stocks quietly climbing toward 2026. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.
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