Market Concerns Led to Clearwater Paper (CLW) Sell-Off Amid Weak Demand Outlook for SBS Paperboard

CLW -1.46%

Longleaf Partners, managed by Southeastern Asset Management, released its “Small-Cap Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned 2.03% in the third quarter, compared with the Russell 3000’s 8.18% and the Russell 2000’s 12.39%. For more information on the fund’s best picks in 2025, please check its top five holdings.

In its third-quarter 2025 investor letter, Longleaf Partners Small-Cap Fund highlighted stocks such as Clearwater Paper Corporation (NYSE:CLW). Clearwater Paper Corporation (NYSE:CLW) is a bleached paperboard manufacturer. The one-month return of Clearwater Paper Corporation (NYSE:CLW) was -2.03%, and its shares lost 33.78% of their value over the last 52 weeks. On December 01, 2025, Clearwater Paper Corporation (NYSE:CLW) stock closed at $17.84 per share, with a market capitalization of $286.12 million.

Longleaf Partners Small-Cap Fund stated the following regarding Clearwater Paper Corporation (NYSE:CLW) in its third quarter 2025 investor letter:

"Clearwater Paper Corporation (NYSE:CLW)– Packaging company Clearwater Paper was a detractor in the quarter. The stock sold off as management signaled that demand in the already weak solid bleached sulfate (SBS) paperboard market will be lighter than previously anticipated due to near-term economic uncertainty. This comes at a time when the historically rational SBS market remains oversupplied and well below mid-cycle. Management has a history of positive capital allocation moves and is currently evaluating investing in swinging capacity to another substrate. This, along with competitor closures, tariffs on European imports and recent FX moves adds to the list of things that could help balance the market. Share repurchase is also a tool that has been used wisely in the past, and it continues to be attractive as the business trades at a low single-digit multiple of growing mid-cycle FCF."

Clearwater Paper Corporation (NYSE:CLW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held Clearwater Paper Corporation (NYSE:CLW) at the end of the third quarter, which was 23 in the previous quarter. While we acknowledge the potential of Clearwater Paper Corporation (NYSE:CLW) 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 addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.