ClearBridge Investments released its third-quarter 2025 investor letter, reporting a double-digit gain despite underperforming the Russell 2000 Growth Index. The strategy was impacted by the smallest market caps, low returns on equity, and high beta names. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) saw impressive returns and closed at $98.55 per share on October 9, 2025.

In the same investor letter, ClearBridge highlighted Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) as a top pick for its potential growth and margin expansion in the aerospace and defense industry. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) stock saw a one-month return of 45.64% and gained 300.58% in the last 52 weeks.

Despite its potential, Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is not among the 30 most popular stocks among hedge funds. While 33 hedge fund portfolios held the stock at the end of the second quarter, certain AI stocks are seen as offering greater upside potential with less downside risk.

Read more at Yahoo Finance: Does Kratos Defense & Security Solutions (KTOS) Have Potential for Significant Growth and Margin Expansion?