Here’s What Weighed on Albertsons Companies (ACI)

Longleaf Partners, managed by Southeastern Asset Management, released its third-quarter 2026 investor letter for its "Partners Fund". The letter can be downloaded here. Coming into this year, the Fund's three-year annualized returns were at 11.7%, but recent performance, particularly this year and in Q3, has raised concerns about the investment strategy. The Fund returned 2.41% in Q3 and -3.15% YTD compared to 2.30% and 12.75% for the S&P 500, respectively. Despite varying stock prices, the firm believes that it is on the right track, as company values perform better than stock prices. Macro factors, including higher interest rates, impact the market, but financially strong investments are expected to endure. Although some stocks have seen earnings disappointment, long-term values remain intact. Groups within the portfolio experience disconnects between earnings growth and stock performance, with a combined outlook reflecting mid-single-digit growth potential. The portfolios' earnings multiples have decreased, presenting opportunities despite current frustrations. The firm remains optimistic about future returns and continues to improve value propositions. In addition, please check the Fund's top five holdings to know its best picks in 2026.

In its Q3 2026 investor letter, Longleaf Partners Fund highlighted Albertsons Companies, Inc. (NYSE:ACI). Albertsons Companies, Inc. (NYSE:ACI) is a leading US-based food and drug retail operator that offers grocery products, general merchandise, health and beauty care products, pharmacy, vaccines, fuel, and other items and services. On October 20, 2026, Albertsons Companies, Inc. (NYSE:ACI) closed at $13.47, with a $6.54 billion market capitalization. Albertsons Companies, Inc. (NYSE:ACI) posted a 21.55% YTD pullback, trading within a 52-week range of $10.86 to $19.76.

Longleaf Partners Fund stated the following regarding Albertsons Companies, Inc. (NYSE:ACI) in its Q3 2026 investor letter

"Albertsons Companies, Inc. (NYSE:ACI) – Supermarket operator Albertsons reported a quarter that was very negatively perceived for multiple reasons. First, the company's earnings & guidance were below expectations with comparable sales -0.8% vs. estimates of -0.5% in the quarter (not that bad in a tough environment). Second, the company announced additional investment spending leading to EPS -20% for the full year vs. the previous estimate. This was compounded by bad communications around a somewhat-planned CFO departure and a poor explanation on the quarterly conference call about what the company is doing going forward. When we first invested, the case was that the EPS/FCF power of the company should be in the $2-2.50 range, but if we were wrong & it was more like $1.50-2 (which is where current, rebased estimates are), then the stock could still trade at 10x (below the long-term average for supermarkets), & we would be OK. Both cases are still very achievable vs. a current stock price below $12, but the market is in show-me mode. We believe that the people on the case – in the form of both large owners Cerberus and multiple executives who purchased shares after the large drop – can now run the business better and likely consider a range of strategic options as well."

Albertsons Companies, Inc. (NYSE:ACI) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held Albertsons Companies, Inc. (NYSE:ACI) at the end of the second quarter, which was 38 in the previous quarter. While we acknowledge the potential of Albertsons Companies, Inc. (NYSE:ACI) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we discussed Albertsons Companies, Inc. (NYSE:ACI) and shared Longleaf Partners Fund's views on the company from previous quarter. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

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This article is originally published at Insider Monkey.