Longleaf Partners, a fund managed by Southeastern Asset Management, added Abbott Laboratories to its portfolio in the second quarter of 2026. In its third-quarter investor letter, the fund described the diversified healthcare company as a new holding that is off to a strong start, following a period where the stock price fell nearly 40% from its previous high to the purchase price.
The fund’s third-quarter 2026 performance returned 2.41%, while year-to-date returns stood at -3.15%. These figures compared unfavorably with the S&P 500, which returned 2.30% in the third quarter and 12.75% year-to-date. Despite the recent underperformance relative to the benchmark index, Longleaf Partners maintains that its strategy is on the right track because company values are performing better than stock prices. The firm argues that financially strong investments are expected to endure macro factors such as higher interest rates, even if some stocks experience short-term earnings disappointments.
Abbott Laboratories closed at $102.45 on October 20, 2026, with a market capitalization of $177.28 billion. The stock had experienced an 18.23% year-to-date pullback prior to that date and traded within a 52-week range of $81.97 to $132.03. The fund noted that before the investment was made, Abbott slightly missed earnings estimates while digesting its acquisition of Exact Sciences and dealing with turmoil in the medical technology and infant nutrition industries.
In its letter, Longleaf Partners stated that Abbott reported a solid quarter in July, suggesting the company can return to its decades-long history of high-single to low-double-digit EPS growth. The fund also cited the company’s safe and growing dividend as a key factor. The letter highlighted that Abbott has begun moving on from unwarranted infant nutrition liabilities to further protect the downside. Additionally, the fund pointed out that Abbott has spun off or sold multiple businesses in its history and could consider such moves again for additional upside.
Hedge fund interest in Abbott Laboratories increased at the end of the second quarter, with 86 portfolios holding the stock compared to 73 in the previous quarter. Longleaf Partners remains optimistic about future returns for its portfolio, noting that earnings multiples have decreased and presenting opportunities despite current frustrations. The fund’s combined outlook reflects mid-single-digit growth potential for groups within its portfolio where there is a disconnect between earnings growth and stock performance.