Longleaf Partners Fund, managed by Southeastern Asset Management, has issued its investor letter for the fourth quarter of 2025. The fund returned 3.35% during the quarter. This compares to a 2.66% return for the S&P 500 and a 3.81% return for the Russell 1000 Value Index.
The firm described 2025 as a challenging year without standout performers. About 5% of its portfolio gained 20% or more, while 35% of the S&P 500 reached that level. The firm stated that overall market dynamics drove its relative underperformance. It focuses on actions to strengthen portfolio outcomes rather than chasing winners at the wrong time. The letter reiterates that building a portfolio of real companies during a period of excessive speculation will benefit all markets.
In the letter, the fund highlighted PayPal Holdings, Inc. as a performance detractor in 2025. PayPal is a technology platform that enables digital payments. On January 16, 2026, PayPal stock closed at $56.88 per share. Its one-month return was -4.88%, and its shares lost 38.04% of their value over the last 52 weeks. The company has a market capitalization of $54.337 billion.
Regarding PayPal, the fund stated: "Digital payments platform PayPal was a detractor in 2025. While the company made real operational progress stabilizing and growing transaction margin dollars, expanding profit margins through improved cost discipline, accelerating FCF generation, and returning substantial capital through buybacks the market remained focused on the lack of further acceleration in Branded checkout volume, which grew in the mid-single-digit range while investors were hoping for high-single-digit growth. Increased reinvestment in marketing and technology combined with macro pressure on discretionary spending further weighed on sentiment. Despite the stock’s underperformance, PayPal’s scale, two-sided network, and deep transaction-level data across hundreds of millions of consumers and tens of millions of merchants remain underappreciated assets that provide meaningful long-term optionality."
According to a database, 86 hedge fund portfolios held PayPal at the end of the third quarter, down from 89 in the previous quarter. PayPal is not on a list of 30 Most Popular Stocks Among Hedge Funds.