| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.8% | 4.2% | 8.3% |
| 2025 |
|---|
| 8.3% |
Next Century Growth Investors delivered positive absolute returns in Q4 2025 but faced relative performance challenges as quality factors worked against active managers throughout the year. The firm's small cap growth strategy returned 4.20% in Q4 and 8.26% for the full year, underperforming the Russell 2000 Growth Index due to their focus on high-quality, profitable companies while low-quality stocks with negative earnings significantly outperformed. Biotech and pharmaceutical stocks were major contributors to index returns, areas where NCG maintains minimal exposure due to unproven business models. The portfolio remains overweight technology, industrials, and materials while underweight consumer and financials. Looking forward, the manager sees improving conditions for small cap performance driven by positive earnings growth, Fed rate cuts, pro-growth policies, and attractive valuations relative to large caps. They added 16 new positions in Q4 while maintaining their disciplined approach of investing in the fastest growing and highest quality companies, confident their long-term track record validates this strategy.
Next Century Growth Investors maintains their focus on investing in high-quality growth companies with proven business models and sustainable growth drivers, believing this approach will lead to long-term outperformance despite near-term headwinds from quality factors working against active managers.
The manager believes the environment could be improving for small cap stock performance, with positive earnings growth expected to continue and potentially accelerate in 2026. They see pro-growth policies, Fed rate cuts, and accelerated innovation as supportive factors. Consumer spending remains resilient despite tepid employment growth.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 21 2026 | 2025 Q4 | ADPT, ATEC, AVPT, AXGN, BETA, BLND, CCB, CELH, COHR, ELF, KNX, KVYO, MTSI, PCOR, PEGA, PI, PRCH, QTWO, TOL, TTAN, UTI, WAL, WULF | active management, growth, healthcare, industrials, Outperformance, Quality, small caps, technology | - | The manager emphasizes investing in high-quality growth companies with proven business models and sustainable growth drivers. They note that quality factors worked against active managers… |
| Oct 24 2025 | 2025 Q3 | - | industrials, Rare Earths, Rate Cuts, semiconductors, small caps |
XMTR BE |
Small caps rallied with momentum pockets (biotech, miners/HPC, critical minerals) but quality factors lagged; the strategy underweighted speculative areas. Positioning is overweight industrials and technology… |
| Aug 7 2025 | 2025 Q2 | - | growth, innovation, profitability, small caps, Valuation discipline | - | The commentary emphasizes small-cap growth companies with expanding addressable markets and improving profitability. Management focuses on disciplined valuation and avoiding speculative excess. Small caps are… |
| Mar 31 2025 | 2025 Q1 | - | - | - | - |
| Dec 31 2023 | 2023 Q4 | BRZE, CSTL, CWAN, DAVA, GWRE, MEDP, NTRA, TNDM | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
BiotechnologyHealthcare industry positioned for catch-up growth after several years of below-trend performance. Government spending expected to increase relative to feared cuts, with companies signaling improvement in revenue growth. Focus on 'picks & shovels' businesses serving the industry. |
Life Science Tools Pharmaceuticals CRO & CDMO Healthcare Research | |
NuclearPosition in Uranium Energy as the largest licensed uranium miner in the U.S., positioned to benefit from renewed focus on nuclear power as long-term energy solution and U.S. efforts to strengthen domestic nuclear fuel supply chains for national security. |
Uranium Mining Nuclear Power Energy Security Domestic Supply National Security | |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
| 2025 Q3 |
IndustrialsThe fund increased exposure to high-quality industrial businesses with potential for cyclical upturn. Added Quanta Services for AI data center build-out, Hubbell for electrical grid upgrades, Old Dominion for freight cycle recovery, and Waste Connections for secondary market focus. |
Infrastructure Automation Transportation Electrical Equipment Waste Management |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 2025 Q2 |
SmallCaps |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 24, 2025 | Fund Letters | Tom Press | XMTR | Xometry Inc. | Industrials | Commercial Services & Supplies | Bull | NASDAQ | AI, Automation, Digitization, growth, manufacturing, Margins, marketplace, Partnerships, Reshoring, supply chain | Login |
| Oct 24, 2025 | Fund Letters | Tom Press | BE | Bloom Energy Corporation | Industrials | Renewable Electricity | Bull | NYSE | AI, backlog, energy, Fuel cells, growth, hyperscalers, infrastructure, Margins, Power, renewables | Login |
| TICKER | COMMENTARY |
|---|---|
| ATEC | Alphatec's shares rose and contributed to performance after a strong earnings report highlighted accelerating sales, market share gains in the spine segment and improved profitability. |
| AXGN | New to the strategy was Axogen, Inc., which develops technologies for peripheral nerve regeneration and repair from injuries caused by trauma, chronic conditions, or surgical procedures. Its flagship product, Avance Nerve Graft, is a decellularized human nerve allograft that preserves native nerve microarchitecture while eliminating immune rejection risk. It is the only FDA-approved implantable biological nerve allograft on the market. |
| BETA | BETA Technologies is an aerospace and defense company developing electric aircraft, propulsion systems and charging infrastructure for government, logistics and commercial applications. Its vertically integrated model, lower operating cost structure and focus on conventional takeoff aircraft provides multiple avenues for long-term growth. |
| CELH | One such idea that we bought in the last quarter is Celsius Holdings. We will refrain from a full writeup today, given Elliot recently presented at MOI Global's Best Ideas 2026 Conference. |
| COHR | Copart is the leading global marketplace for damaged and end-of-life vehicles, sitting between insurance companies that need to dispose of total-loss cars and a fragmented, worldwide base of dismantlers, rebuilders, dealers, and exporters. Against that backdrop, the last four quarters have been stronger in the business than in the stock. Revenue and operating income have continued to grow, helped by steady fee-per-unit gains, higher international contribution, and ongoing expansion of yards and services. These concerns about near-term volume and a supposedly resurgent competitor have weighed on sentiment, and the share price has reflected that—Copart is down roughly 30% in 2025. |
| ELF | e.l.f. Beauty's earnings report included a decline in core domestic sales growth and fiscal year guidance below expectations. We continue to hold the stock, as the company offers a strong product set addressing a favorable spending category, though additional progress is needed to restore positive fundamental and share-price performance. |
| KNX | During the quarter we initiated a position in Knight-Swift, North America's largest truckload carrier. The company is operating in a prolonged freight downturn, as excess capacity added during the 2021 profit peak has persisted despite weaker demand, pressuring rates and earnings. With its scale and network efficiency, we believe profitability should recover as conditions normalize. |
| MTSI | Semiconductor holding MACOM Technology Solutions rose nearly +40%, as the company experienced broad-based demand, similar to many semiconductor companies in 2025. |
| PI | Impinj is a leading semiconductor manufacturer specialising in radio frequency identification (RFID) technology. While RFID adoption is accelerating, it is still in the early stages of replacing legacy identification solutions, and we believe Impinj is well positioned to capitalise on this technological shift. |
| TOL | Our homebuilding companies were the weakest performers this quarter with Builders FirstSource (BLDR) and Toll Brothers (TOL), both landing on our list of bottom 5 detractors. We remain bullish on the long-term prospects for the homebuilding sector as we believe there is a shortage of housing and these companies trade for large discounts to their intrinsic values. We added to our position in both companies this quarter. |
| TTAN | ServiceTitan is a leading provider of vertical software solutions for the trades, including plumbing, HVAC and electrical. Its platform supports the entire workflow from lead generation to payment, generating revenue through subscriptions and usage-based processing. We see meaningful growth opportunities through new customer acquisition, upselling and expansion into additional trades. During the quarter, we increased our position following a pullback amid broader software industry weakness, reflecting our conviction in the durability of its profit cycle. |
| UTI | Top 3 detractors to absolute performance: UTI, INOD, AMSC |
| WAL | We sold our investment in Western Alliance upon finding the company was exposed to the First Brands bankruptcy via a note-on-note lending line to Jeffries/Point Bonita Capital. Our worst-case scenario analysis led us to conclude that there was a small but real probability of needing to raise capital. Credit fears could be an overhang on the shares for an extended period. Despite the recent price weakness, this has been a very successful investment for us. |
| WULF | TeraWulf Inc. represents 1.8% of the strategy in the Information Technology sector. |
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