| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 0.114 | -0.044 | 0.019 |
| 2025 | 2024 |
|---|---|
| 1.9% | 7.6% |
Fenimore's Dividend Focus Fund declined 4.41% in Q4 2025, underperforming the Russell Midcap Index as AI speculation continued to drive capital away from quality dividend-paying companies. The fund's high-quality bias weighed on short-term performance as investors favored speculative and lower-quality businesses over companies with strong balance sheets and consistent profitability. Despite underperformance, portfolio companies demonstrated solid fundamentals with 9.5% expected earnings growth for 2025 accelerating to 14% in 2026, while 80% posted positive earnings and 55% raised full-year expectations. Holdings raised dividends an average of 9% in line with earnings growth. Top performers included Ross Stores, Jack Henry & Associates, and Amphenol, while Paychex, CDW, and Trane Technologies detracted. Management added to quality names trading at attractive valuations and trimmed positions for portfolio management. Looking ahead, the team expects continued volatility but believes compelling valuations in quality franchises position the fund well for future performance as fundamentals reassert themselves.
Fenimore maintains disciplined focus on high-quality dividend-paying companies with strong fundamentals, believing that solid business characteristics will ultimately reassert themselves as primary drivers of stock prices despite current market preference for speculative AI-related investments.
Market conditions entering 2026 remain mixed with extended valuations for AI-related stocks while pockets of opportunity have emerged in quality franchises. Research team expects continued market volatility as investors balance anticipated solid earnings growth and continued Fed rate cuts with questions about AI expansion sustainability and mid-term elections. Key developments to watch include Fed independence under new leadership and Supreme Court ruling on tariff legality.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 13 2026 | 2025 Q4 | AJG, APH, AVY, BR, CDW, CTAS, HEI, HLI, IEX, JKHY, MCHP, MLM, PAYX, ROST, RSG, STE, SYK, TT, VRSK, WSO | AI, dividends, healthcare, mid cap, Quality, technology, value |
ROST JKHY APH TT |
Fenimore maintains focus on high-quality companies with strong balance sheets, consistent profitability, and prudent capital allocation. Quality as a factor remained out of favor despite many businesses showing strong long-term fundamental prospects. The firm believes solid business fundamentals should reassert themselves as the primary driver of stock prices in the long run. AI excitement and related infrastructure builds continued to drive the market, drawing capital away from nearly every other area. Investor enthusiasm was driven toward businesses with AI-related exposures. Amphenol benefited from data center buildouts supporting AI, with its IT Datacom segment growing 128% organically. Dividend-paying companies lagged non-dividend-paying companies by more than 50%. On average, portfolio holdings raised their dividends 9% over 2025, in line with their earnings growth. The top three dividend raisers were Amphenol (55%), Cintas (15%), and Verisk Analytics (15%). Valuations for portfolio companies are becoming more attractive while other indices become more overvalued. The fund sees compelling valuations within the portfolio, which management believes sets the fund up for solid future performance. Many quality franchises are trading at relative multi-year lows. |
| Oct 9 2025 | 2025 Q3 | APH, ENTG, FTV, JKHY, POOL, ROST, VRSK | AI, Compounding, dividends, earnings, Quality |
APH US ROST US VRSK US FSV CN |
The strategy focuses on high-quality dividend growers benefiting from AI infrastructure spending, with Amphenol and GE Healthcare leading on growth and capital discipline. Despite short-term underperformance versus speculative stocks, dividend momentum remains robust with 25 of 26 holdings increasing payouts. The approach emphasizes compounding, earnings growth, and valuation discipline. |
| Jun 30 2025 | 2025 Q2 | ENTG, GEHC, HEI, MKC, ROST, TT | cash flow, dividends, downside protection, fundamentals, Quality |
ENTG GEHC |
The commentary stresses high-quality businesses with durable cash flows and growing dividends amid speculative market behavior. Management believes quality stocks lag temporarily during risk-on rallies but outperform over full cycles. Capital preservation and downside protection remain core objectives. |
| Mar 31 2025 | 2025 Q1 | AJG, HEI, ROST, STE, TT | - | - | |
| Dec 31 2024 | 2024 Q4 | BR, CDW, MCHP, PAYX, TT | - | - | |
| Sep 30 2024 | 2024 Q3 | AVY, ENTG, POOL, TT | - | - | |
| Jun 30 2024 | 2024 Q2 | APH, ENTG, HEI, HLI, MCHP | - | - | |
| Mar 31 2024 | 2024 Q1 | APD, SYK, TROW, TT | - | - | |
| Dec 31 2023 | 2023 Q4 | A, APD, ENTG, MLM, TT | - | - | |
| Sep 30 2023 | 2023 Q3 | AVY, CDW, CTAS, MCHP, THG, TT | - | - | |
| Jun 30 2023 | 2023 Q2 | BOC, CASS, CBZ, EXLS | - | - | |
| Mar 31 2023 | 2023 Q1 | AJG, MCHP, SYK, TROW | - | - |
| 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 |
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth | |
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 | |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q3 |
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 |
Compounding |
||
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth | |
| 2025 Q2 |
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 |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 9, 2025 | Fund Letters | John Fox | APH US | Amphenol Corp. | Information Technology | Electronic Components | Bull | NYSE | AI, Connectivity, data centers, diversification, electronics, growth, Margins | Login |
| Oct 9, 2025 | Fund Letters | John Fox | ROST US | Ross Stores, Inc. | Consumer Discretionary | Apparel Retail | Bull | NASDAQ | consumer, growth, Inventory, Margins, Off-price, retail, valuation | Login |
| Oct 9, 2025 | Fund Letters | John Fox | VRSK US | Verisk Analytics, Inc. | Industrials | Research & Consulting Services | Bear | NASDAQ | acquisition, analytics, Data, growth, Insurance, Risk, valuation | Login |
| Oct 9, 2025 | Fund Letters | John Fox | FSV CN | FirstService Corporation | Real Estate | Professional Services | Bull | TSX | Acquisitions, compounding, growth, M&A, Property-services, recurring revenue, resilience | Login |
| Jun 30, 2025 | Fund Letters | John Fox | ENTG | Entegris Inc. | Information Technology | Semiconductor Materials & Equipment | Bull | NASDAQ | Cyclicals, materials, recovery, semiconductors, technology | Login |
| Jun 30, 2025 | Fund Letters | John Fox | GEHC | GE HealthCare Technologies Inc. | Health Care | Health Care Equipment | Bull | NASDAQ | AI, diagnostics, healthcare, Imaging, recurring revenue | Login |
| Jan 13, 2026 | Fund Letters | John Fox | ROST | Ross Stores, Inc. | Consumer Discretionary | Apparel Retail | Bull | NASDAQ | Comps, discounts, Offprice, traffic, Value | Login |
| Jan 13, 2026 | Fund Letters | John Fox | JKHY | Jack Henry & Associates, Inc. | Information Technology | Application Software | Bull | NASDAQ | Fintech, Margins, marketshare, Rfp, Software | Login |
| Jan 13, 2026 | Fund Letters | John Fox | APH | Amphenol Corporation | Information Technology | Electronic Components | Bull | New York Stock Exchange | Acquisitions, AI, datacenters, Interconnect, semiconductors | Login |
| Jan 13, 2026 | Fund Letters | John Fox | TT | Trane Technologies plc | Industrials | Building Products | Bull | New York Stock Exchange | backlog, datacenters, HVAC, refrigerants, Thermal | Login |
| TICKER | COMMENTARY |
|---|---|
| AJG | Arthur J Gallagher faced continued negative sentiment around insurance-related companies, with shares underperforming due to a combination of investors moving away from typically more defensive stocks and company-specific factors. The company's earnings were impacted by accounting noise from the AssuredPartners acquisition and a miss on brokerage organic growth, which led to questions about growth deceleration. |
| APH | We trimmed Amphenol Corp. |
| BR | This valuation disparity is what we see as another example of the large cap vs. small cap valuation opportunities in general, as DFIN's market value is only $1.2 billion vs. BR at $26.6 billion. |
| CDW | CDW was the second-worst performer. The IT industry continued to suffer from the pull forward of spending during COVID; however, we saw some momentum with the Windows 11 refresh and all of CDW's business lines had solid growth except for education. Despite this, overall earnings growth only exhibited modest improvement. |
| CTAS | During the quarter, we initiated new positions in two companies – Cintas Corp (CTAS) and Marvell Technology Inc. (MRVL). Cintas is the nation's largest uniform rental and facility services provider serving around 1 million customers. We are attracted to the company's strong execution, potential for continued growth in the future, return profile, and current valuation leading us to initiate a new position in the stock. |
| HEI | We've held HEI since early 2021. It's one of those quietly excellent family businesses. The Mendelsons have run it for decades, they own a meaningful stake, and they've built durable niches in aerospace parts and defense electronics. HEI was up 36% in 2025, hitting new highs on strong results across both their Flight Support and Electronic Technologies divisions. They keep doing what they do: disciplined acquisitions, high returns on capital, strong cash generation. |
| HLI | global investment bank Houlihan Lokey, Inc. presented a drag in Financials. |
| IEX | IDEX's stock had a welcome bounce as the company's organic growth and order book inflected higher in line with our thesis. |
| JKHY | Jack Henry & Associates, Inc. is a leading provider of technology solutions for community banks and credit unions. Shares rose after the company reported better-than-expected quarterly results and raised financial guidance. Adjusted revenue grew 9% and earnings per share increased 21% in the quarter, reflecting a favorable demand environment, market share gains, and strong margin expansion. |
| MCHP | Microchip Technology is one of the leading analog and microcontroller companies, benefiting from long product lifecycles and diverse end markets. Microchip struggled with supply chain challenges over the past 24 months as lengthening production lead times led to customer over-ordering. The company's founder, Steve Sanghi returned to the CEO role this past summer and has been successful in reducing excess inventory and positioning the company for a recovery in market share. We are encouraged by Steve's action plans, but as the stock's valuation has recovered, we elected to sell our small stake. |
| PAYX | Despite PAYX reporting strong earnings that exceeded expectations, the stock sold off 10% on economic concerns which mutes the near-term outlook. Employment numbers for small and midsized businesses remain weak which pressured the stock. |
| ROST | ROST posted strong same-store sales in its fiscal third quarter. In our estimation, the new CEO is doing an excellent job of reviving growth. We also believe that this off-price retailer is advantaged over traditional apparel companies because of its everyday discounts. In the current economy, where certain consumers are stressed, ROST fills a critical need. |
| RSG | Addition reflects attractive opportunity to increase our exposure in a defensive and resilient business model. The waste management industry has lagged the broader market this year due to cyclical volume weakness in construction, demolition, and the industrial sector. Despite these short-term headwinds, RSG continues to exhibit operational strength through pricing power and cost controls, which have led to stronger margins. We remain attracted to the high-quality, essential business with strong and stable cash flow generation. Recently, insiders have bought shares in the open market, which we view as an additional data point to the attractive valuation. |
| STE | STE trades ~25x 2026 EPS and 21x 2027 EPS, versus SHC at 17x and 14x my estimates, respectively. |
| SYK | Stryker (SYK) is a leading global medical technology company with strong franchises across orthopedics, surgical equipment, and neurotechnology. The company has consistently gained market share due to its first-to-market robotic surgery platform and strong execution in ambulatory surgery centers. Furthermore, growth expectations are boosted by secular tailwinds from an aging population and a long runway for international growth. |
| TT | TT continued to be a juggernaut, in our view, as earnings and backlog remained strong. AI data center cooling was a strong contributor while its residential HVAC business is experiencing weakness as the industry changes over to a new refrigerant. |
| VRSK | From a stock selection perspective, our positions in Verisk Analytics, Inc. (VRSK) and Watsco, Inc. (WSO) were the biggest laggards. |
| WSO | Relative weakness was also driven by Watsco amid softer HVAC trends |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
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