<div id="readability-page-1">The London Company, an investment management company, released “The London Company SMID Cap Strategy” second quarter 2025 investor letter. A copy of the letter can be downloaded here. Following a downturn in Q1, U.S. stocks experienced a double-digit gain in Q2, amid volatility stemming from tariff news. A risk-on rally followed due to a temporary pause in tariff escalations, widespread optimism around enterprise AI, and a healthy earnings outlook. Against this backdrop, the portfolio fell 0.6% (-0.8% net) during the second quarter vs. an 8.6% increase in the Russell 2500 Index. Sector allocation contributed to the fund’s performance in the quarter, while stock selection detracted. Please review the fund’s top 5 holdings to gain insight into their key selections for 2025. In its second quarter 2025 investor letter, The London Company SMID Cap Strategy highlighted stocks such as Somnigroup International Inc. (NYSE:SGI). Somnigroup International Inc. (NYSE:SGI) is a bedding products manufacturer. The one-month return of Somnigroup International Inc. (NYSE:SGI) was 7.30%, and its shares gained 43.84% of their value over the last 52 weeks. On July 28, 2025, Somnigroup International Inc. (NYSE:SGI) stock closed at $74.78 per share, with a market capitalization of $15.598 billion. The London Company SMID Cap Strategy stated the following regarding Somnigroup International Inc. (NYSE:SGI) in its second quarter 2025 investor letter: <blockquote> “Initiated: Somnigroup International Inc. (NYSE:SGI) – Formerly Tempur Sealy, SGI is the combined company of Tempur Sealy the acquired Mattress Firm. SGI is the clear leader in the bedding industry, and the company is gaining market share while generating robust free cash flow. Strong brand equity, solid management execution, and vertical integration from the acquisition support our investment thesis. Currently, the bedding market is weak with volumes near a 30-year low. Higher mortgage rates and rising home prices may limit unit sales in the short term. Longer term, we believe that an eventual industry rebound, synergies from the acquisition, and greater innovation are keys to the company’s success. We have owned SGI in the past and just sold it from the Small Cap portfolio due to its rising market cap following the acquisition of Mattress Firm.” </blockquote> <div id="attachment_1199633"><img src="https://imageproxy.pbkrs.com/https://imonkey-blog.imgix.net/blog/wp-content/uploads/2023/09/29141235/TPX-insidermonkey-1696011152326-768x430.jpg/query-YXV0bz1mb3J0bWF0JmV4cGlyZXM9MTc4NTI4MzIwMCZmaXQ9Y2xpcCZoZWlnaHQ9MjY5JndpZHRoPTQ4MA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="830" height="465" original-src="https://imageproxy.pbkrs.com/https://imonkey-blog.imgix.net/blog/wp-content/uploads/2023/09/29141235/TPX-insidermonkey-1696011152326-768x430.jpg/query-YXV0bz1mb3J0bWF0JmV4cGlyZXM9MTc4NTI4MzIwMCZmaXQ9Y2xpcCZoZWlnaHQ9MjY5JndpZHRoPTQ4MA"/>A satisfied customer sleeping on a comfortable bed, bedding products laid out on the bed.</div> Somnigroup International Inc. (NYSE:SGI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held Somnigroup International Inc. (NYSE:SGI) at the end of the first quarter, which was 58 in the previous quarter. While we acknowledge the risk and potential of Somnigroup International Inc. (NYSE:SGI) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Somnigroup International Inc. (NYSE:SGI) and that has 10,000% upside potential, check out our report about this cheapest AI stock. In another article, we covered Somnigroup International Inc. (NYSE:SGI) and shared The London Company Small Cap Strategy’s views on the company in the previous quarter. 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The London Company highlighted Somnigroup International Inc. (SGI) in its Q2 2025 investor letter, noting its strong market position in the bedding industry despite current market challenges. SGI's stock rose 7.30% in one month and 43.84% over the past year, closing at $74.78 with a market cap of $15.598 billion. The company benefits from robust free cash flow and strong brand equity, although higher mortgage rates may limit short-term sales. The London Company has previously owned SGI but has shifted focus to AI stocks with higher return potential.

What Makes Somnigroup International Inc (SGI) an Investment Choice?