Wasatch Backs Loar Holdings as Hedge Funds Trim Positions
Loar Holdings has dropped 11% in a month despite posting record sales, a divergence that highlights growing uncertainty among hedge funds even as long-duration investors like Wasatch hold firm.
Loar Holdings closed at $71.60 on July 28, giving the aerospace and defense components manufacturer a market capitalization of $6.7 billion. This price reflects a sharp one-month drop of 10.79%, pushing its 52-week return into negative territory at minus 0.93%. The decline arrives just as the company reported record quarterly net sales.
Wasatch Global Investors highlighted Loar as a notable performance contributor in its second-quarter investor letter. The asset manager noted that Loar benefited from a broader rally among aerospace and defense companies. Wasatch emphasized that the manufacturer's fundamentals remain intact despite the recent share price weakness.
"Loar operates in industries that have high barriers to entry due to stringent manufacturing and certification requirements," Wasatch wrote to clients. "And the long life of commercial and defense aircraft means Loar can sell the same replacement parts for several years." This aftermarket dynamic provides the company with highly visible, long-duration revenue streams that appeal to growth-oriented funds.
However, other institutional investors are moving in the opposite direction. Data shows that 25 hedge fund portfolios held Loar Holdings at the end of the first quarter, a notable decrease from 33 portfolios in the prior quarter. This reduction in hedge fund exposure complicates the narrative of a universally supported growth stock and may be contributing to recent selling pressure. Loar is notably absent from the list of the 40 most popular stocks among hedge funds heading into 2026, indicating it remains a niche holding rather than a mainstream institutional favorite.
The stock's underperformance also stands out against a highly favorable backdrop for global equities. The MSCI All Country World Index surged 14.93% in the second quarter. This broad rally was fueled by artificial intelligence enthusiasm and improving geopolitical sentiment following a late-quarter U.S.-Iran ceasefire.
Wasatch’s own Select Strategy lagged this benchmark, hindered by poor stock selection in U.S. information technology and financials. Still, the firm is betting that market attention will eventually shift away from AI-driven momentum trades and back toward companies with durable competitive advantages. For Loar, the central question for investors is whether those high barriers to entry can absorb the impact of cooling hedge fund interest.
