Fred Alger Management released its fourth-quarter 2025 investor letter for the Alger Small Cap Focus Fund. The U.S. equity market finished the quarter strongly, with the S&P 500 rising 2.7%. Corporate earnings that beat expectations, the Federal Reserve's continued interest rate easing, and a resilient macroeconomic environment supported investor optimism. Trade policy clarity also provided support.
Below the index level, divergence increased during the quarter. Enthusiasm for AI investment faced growing doubts due to bottlenecks, financing challenges, and uncertainty over return generation. The firm noted ongoing secular trends that present attractive opportunities for small-cap stocks.
In the fourth quarter of 2025, the Fund's Class A shares outperformed the Russell 2000 Growth Index. The Utilities and Financials sectors contributed to the Fund's relative performance, while the Consumer Discretionary and Information Technology sectors detracted.
The investor letter highlighted Natera, Inc. (NASDAQ:NTRA), a diagnostics and research company specializing in molecular testing services. Natera's one-month return was -0.31%, but its shares gained 46.03% over the past 52 weeks. On January 16, 2026, Natera stock closed at $231.25 per share, giving it a market capitalization of $32.248 billion.
Regarding Natera, Inc., the fund stated: "Natera, Inc. (NASDAQ:NTRA) is a specialty diagnostics laboratory that provides high-value genetic testing across three core franchises: reproductive health (including non-invasive prenatal testing for chromosomal conditions such as trisomy 13, 18, and 21), oncology (led by Signatera, which measures circulating tumor DNA to assess treatment response and detect molecular residual disease and cancer recurrence), and transplant (tests used to monitor organ rejection). These tests are built on the company’s proprietary cell-free DNA liquid biopsy platform, enabling highly sensitive detection from a blood sample. Shares contributed positively after the company reported strong fiscal third-quarter earnings, with management commentary pointing to revenue and margin performance that exceeded expectations on the back of higher test volumes and favorable reimbursement dynamics— particularly within the Signatera franchise—alongside another increase to full-year 2025 revenue and margin guidance."
According to database information, 70 hedge fund portfolios held Natera at the end of the third quarter of 2025, up from 66 in the prior quarter. In the third quarter of 2025, Natera generated $592 million in revenue, an increase of approximately 35% compared to the third quarter of 2024.