| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 3.2% | - |
Sawgrass Asset Management's Large Cap Quality Growth portfolio returned 3.2% in Q4 2025, outperforming the Russell 1000 Growth Index by 2.1%. The portfolio benefited from broadening investor demand outside the Mag 7 and rotation into more attractively valued sectors, particularly healthcare. Strong contributors included biotech stocks Eli Lilly, Incyte, and United Therapeutics, plus chip stocks Advanced Micro Devices, Broadcom, and Applied Materials that avoided AI-related negative sentiment. Detractors included traditionally defensive stocks AutoZone, Comcast, and Zoetis, along with software names ServiceNow and Workday pressured by AI efficiency concerns. The manager notes that earnings growth rather than multiple expansion drove 2025 gains, reflecting increased market preference for fundamentals. With markets at elevated valuations after three consecutive years of double-digit gains, the portfolio's positioning in high-quality companies at attractive valuations could benefit if the fundamentals-focused trend continues into 2026.
Focus on attractively valued high-quality companies positioned to benefit from a potential shift toward fundamentals-driven returns rather than momentum or multiple expansion.
If the trend toward fundamentals continues into 2026, returns may become more dependent on earnings delivery and balance-sheet strength rather than momentum or macro-driven optimism. The portfolio's positioning in attractively valued high-quality companies could benefit from this environment.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 20 2026 | 2025 Q4 | AMAT, AMD, AVGO, AZO, CMCSA, DHR, INCY, LLY, NOW, UTHR, WDAY, ZTS | AI, Biotechnology, growth, healthcare, Quality, Rotation, semiconductors, technology | - | Doubts about the circularity of AI revenue deals began to surface, with some chip stocks avoiding negative sentiment while software stocks were depressed by AI… |
| Jul 21 2025 | 2025 Q2 | - | Concentration, Discipline, earnings durability, Quality, valuation | - | The commentary focuses on high-quality large-cap companies amid extreme market concentration and elevated valuations. Management stresses balance-sheet strength, earnings durability, and valuation discipline as protection… |
| May 13 2025 | 2025 Q1 | - | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
BiotechnologyBiotech delivered its best quarter in five years, benefiting from improving interest rates, easing regulation enabling more M&A activity, and excitement around AI's promise in drug discovery. The portfolio nearly doubled its biotech exposure during the quarter as more opportunities presented themselves in this improving environment. |
Drug Discovery M&A Interest Rates Regulation Pharmaceuticals | |
SemiconductorsMACOM Technology Solutions rose nearly +40% as the company experienced broad-based demand, similar to many semiconductor companies in 2025. The team exited Astera Labs following industry conference presentations that suggested emerging competitive risks and concerns over single customer concentration, while initiating a position in Credo Technology for AI-connectivity exposure. |
Demand Competition Connectivity Customer Concentration | |
| 2025 Q2 |
QualityThe portfolio has shifted toward higher quality businesses with better profitability, lower leverage, and less volatile earnings. Quality stocks underperformed significantly in 2025, creating attractive entry points for value investors. The manager maintains price discipline while seeking quality companies trading at discounts to intrinsic value. |
Quality Profitability Leverage Earnings |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| AMAT | AMAT was a top contributor in 4Q25 as semiconductor equipment stocks rallied on improving wafer-fab spending visibility. Management noted during its quarterly call that orders tied to AI-related capacity—particularly advanced logic and high-bandwidth memory—were tracking ahead of plan, leading to mid-teens growth in semiconductor systems revenue. Strength in services and spares also continued, with installed base revenues growing at a high single-digit rate. |
| AMD | AMD was mentioned as an example of businesses that already make money, have shown they can do so through cycles and are priced so that we do not need everything to go right. |
| AVGO | During the quarter, we initiated a below-average weight position in leading semiconductor and infrastructure software company Broadcom. Broadcom's ongoing transformation from a provider of custom ASICs to a full rack-scale solutions vendor, including scale-up networking, marks a significant improvement in its strategic positioning compared to earlier in the year. This strategic evolution has been validated by recent product launches, such as the Scale-up Ethernet solution, and committed orders from major customers like Anthropic. |
| AZO | We initiated two new positions during the year—Greggs and AJ Bell, whilst reducing our exposure to NEXT and Compass Group; and selling out of AutoZone entirely during September. |
| CMCSA | Within the portfolio, stocks like AutoZone, Comcast, and Zoetis were all punished for having perceived headwinds to already lowered expectations for growth. |
| DHR | After lagging through the first three quarters of 2025, Danaher's stock rebounded during Q4 as bioprocessing, life science, and diagnostics demand continued to recover from a cyclical trough. On the 3Q25 call, management established conservative 2026 growth expectations. Revenue is expected to continue to lag long-term trends at 3-6% but improve throughout the year. |
| INCY | Biopharma Eli Lilly, biotech stocks Incyte and United Therapeutics, and life sciences giant Danaher all contributed positively to strong Q4 performance. |
| LLY | Eli Lilly shares were a top performer in 4Q25 after delivering strong Q3 2025 earnings in October. Revenue rose 54% year-over-year to $17.6 billion, and adjusted EPS of $7.02 beat consensus of $6.02. Growth was driven by its GLP-1 franchises, Mounjaro and Zepbound, where sales more than doubled year-over-year, alongside strength in other therapeutic areas. Management raised full-year guidance for both revenue and earnings, reinforcing investor confidence in the company's growth outlook. |
| NOW | In the case of ServiceNow, the stock weakened following reports of a potential large acquisition while the company has also been challenged by bearish sentiment across the software as a service or SAAS segment. |
| UTHR | Biopharma Eli Lilly, biotech stocks Incyte and United Therapeutics, and life sciences giant Danaher all contributed positively to strong Q4 performance. |
| WDAY | Finally, we have exited our relatively small position in Workday. The company's growth has decelerated the past few quarters and the Financials segment of the business (~25% of sales) is growing slower than we believe it should be. This is a company we may revisit at a later date but, for now, feel that we have better opportunities in other areas of the portfolio. |
| ZTS | ZTS: $6B authorized August 2024; $1.5B used as of September 2025 |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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| Industry | Prev Quarter % | Current Quarter % | Change |
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