| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.9% | 0.2% | 3.0% |
SGA's U.S. Large Cap Growth portfolio returned 0.3% gross and 0.2% net in Q4 versus 1.1% for the Russell 1000 Growth Index. Despite trailing for the quarter, relative performance improved as market volatility increased, outpacing the benchmark by over 3% in the second half. 2025 proved challenging with the portfolio returning 3.7% gross versus 18.6% for the Russell 1000 Growth, as extreme momentum favored lower-quality, speculative, and cyclically sensitive stocks over the quality characteristics SGA seeks. The momentum was driven by AI infrastructure spending, rate cut expectations, and cyclical optimism. However, underlying portfolio fundamentals remained solid with 12% earnings growth. The portfolio's relative valuation has reached its most attractive level since inception, creating asymmetric opportunity as cyclicals trade at peak multiples just as AI CapEx growth is poised to slow. SGA maintains conviction in quality compounders positioned to benefit from inevitable momentum reversal and market leadership broadening.
SGA builds high-conviction portfolios focused on quality growth businesses anticipated to achieve consistent mid-teens earnings growth with reduced variability, supported by predictable revenue and cash flow generation, designed to protect and reliably compound client wealth over time.
The setup moving forward is very attractive as the portfolio is well-positioned to benefit from a softening of extreme momentum dynamics and broadening of market leadership. As AI capital expenditure growth inevitably slows, the market is unlikely to continue ignoring the high-quality businesses in the portfolio. The firm remains excited about the opportunity ahead for clients given the historically attractive relative valuation.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Feb 8 2026 | 2025 Q4 | AAPL, AMZN, ARM, AVGO, AXP, COO, CRM, DHR, GOOGL, GWW, INTU, META, MSFT, NFLX, NKE, NOW, SPGI, V, WM, YUM | AI, growth, large cap, momentum, Quality, semiconductors, valuation |
GOOG COO CRM AVGO ARM MSFT META IT YUM ALC |
AI capital expenditures are expected to moderate due to structural constraints including power availability, skilled labor shortages, and capital availability. Hyperscaler CapEx spending has reached… |
| Sep 30 2025 | 2025 Q3 | AAPL, CMG, GART, GOOG, GWW, INTU, NKE, NVDA, NVO, WCN, WDAY | earnings, growth, innovation, moats, technology | - | The commentary emphasizes sustained large-cap growth leadership supported by strong earnings, balance sheet quality, and secular technology adoption. While valuations are elevated, pricing power and… |
| 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 |
Momentum2025 was characterized by extreme momentum dynamics with capital flowing into immediate winners while perceived losers saw unprecedented pressure. Market leadership concentrated in lower-quality, speculative, and cyclically sensitive stocks. The momentum trade has been exceptionally profitable short-term but timing the inevitable reversal remains challenging. |
Cyclical Speculation Leadership Volatility Reversal | |
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 | |
SemiconductorsRGA initiated a position in Lattice Semiconductor, viewing it as an under-appreciated AI winner with immediate gains and longer-term optionality. Lattice's focus on efficiency and advantages in low-power, small footprint FPGAs position it favorably for AI servers, particularly as the only Post-Quantum Cryptography secure chips on the market. |
FPGAs Security Efficiency AI Infrastructure Programmable | |
| 2025 Q3 |
Growth |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Feb 8, 2026 | Fund Letters | Tucker Brown | GOOG | Alphabet Inc | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, cloud, Margins, monetization | Login |
| Feb 8, 2026 | Fund Letters | Tucker Brown | COO | Cooper Companies Inc | Health Care | Health Care Supplies | Bull | New York Stock Exchange | cashflow, Governance, innovation, Margins, Medical devices | Login |
| Feb 8, 2026 | Fund Letters | Tucker Brown | CRM | Salesforce Inc | Information Technology | Application Software | Bull | New York Stock Exchange | AI, ARR, buybacks, cloud, Software | Login |
| Feb 8, 2026 | Fund Letters | Tucker Brown | AVGO | Broadcom Inc | Information Technology | Semiconductors | Bull | NASDAQ | AI, inference, infrastructure, Margins, semiconductors | Login |
| Feb 8, 2026 | Fund Letters | Tucker Brown | ARM | Arm Holdings plc | Information Technology | Semiconductors | Bear | NASDAQ | Margins, Overhang, royalties, semiconductors, Volatility | Login |
| Feb 8, 2026 | Fund Letters | Tucker Brown | MSFT | Microsoft Corp | Information Technology | Systems Software | Bull | NASDAQ | AI, CapEx, cloud, enterprise, Recurring | Login |
| Feb 8, 2026 | Fund Letters | Tucker Brown | META | Meta Platforms Inc | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, CapEx, Engagement, monetization | Login |
| Feb 8, 2026 | Fund Letters | Tucker Brown | IT | Gartner Inc | Information Technology | IT Consulting & Other Services | Bull | New York Stock Exchange | cashflow, Governance, Incentives, Margins, Subscriptions | Login |
| Feb 8, 2026 | Fund Letters | Tucker Brown | YUM | Yum! Brands Inc | Consumer Discretionary | Restaurants | Bull | New York Stock Exchange | Branding, cashflow, ESG, Franchising, Regulation | Login |
| Feb 8, 2026 | Fund Letters | Tucker Brown | ALC | Alcon Inc | Health Care | Health Care Equipment | Bull | New York Stock Exchange | eyecare, Governance, Incentives, ROIC, Sustainability | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | Apple Inc. represents 1.6% of company owned with cost basis of $6,255 million and market value of $61,962 million, providing $280 million in 2025 dividends. |
| AMZN | One company we own that we think has unique positioning to benefit from both the infrastructure and application layers is Amazon. Amazon's logistical prowess is one of the foremost moats in business today and it can and will be enhanced with AI. The company will do this in multiple ways, with better orchestration of its logistics assets and underlying cargo, as well as the buildout of more capable, sophisticated and robust robotics. Amazon is singularly well positioned to dominate the coordination layer, with AI's help, across its entire logistics network. |
| ARM | Arm Holdings was a detractor during the quarter, despite a strong fiscal Q2 earnings report with revenue up 34% and profit 43%. Royalty revenue grew 21%, driven by triple digits data center growth and higher smartphone royalty from compute subsystem (CSS) customers. However, the company faced several headwinds that weighed on investor sentiment. Elevated R&D spending, mostly related to Arm's design service for SoftBank, will impact Arm's margin outlook for next year. |
| AVGO | The primary contributors to its performance were our exposures to Broadcom |
| AXP | American Express Company represents 22.1% of company owned with cost basis of $1,287 million and market value of $56,088 million, providing $479 million in 2025 dividends. |
| COO | Cooper was a top contributor during the quarter after reporting good operating results and announcing several shareholder-friendly developments. In terms of operating results, the company demonstrated progress in alleviating supply constraints for its premium daily silicone hydrogel contact lenses, announced new private label contract wins in the U.S. and Europe, and delivered innovation in myopia control and multifocal lens platforms. |
| CRM | By looking at their Rnancials, FactSet, PayPal, Adobe, and Salesforce seem to be doing Rne. The market, however, is reading subdued revenue growth as a sign of increased competition on their core oSerings. These companies' outlooks look more di'cult than their past. |
| 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. |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| GWW | One of the new entrants into the portfolio was W.W. Grainger, a North American distributor of industrial consumables, tools and supplies. We have previously owned this name in the portfolio and followed closely for many years. The driver to re-introduce to the portfolio now is an attractive valuation and view that an up-cycle seems imminent. Our modelling calls for double digit revenue growth and mid-teens EPS CAGR over the next few years, together with good potential for multiple expansion as earnings accelerate. W.W. Grainger has a solid moat allowing for pricing and market share gains on top of the industrial production growth. Its profitability (GPM, OPM, RoCE and cash conversion) is in the top-quintile relative to peers and financial leverage is low, which allows for generous shareholder returns. |
| INTU | ServiceNow (NOW) and Intuit (INTU) exemplify this dynamic, advancing meaningful AI initiatives that enhance customer value and deepen competitive advantages. Intuit is deploying intelligent agents and conversational tools like 'Ask Anything' to simplify complex financial tasks across QuickBooks and TurboTax. |
| META | On January 9, Meta Platforms unveiled a new agreement with Vistra—the largest generator of competitive electricity in the United States—as well as with TerraPower and Oklo. The announcement builds on Meta's agreement last year with Constellation Energy and positions the company to become one of the largest corporate purchasers of nuclear-generated electricity in the United States. |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
| NFLX | NFLX was the portfolio's largest detractor in 4Q25 following investor concerns around near-term subscriber growth and rising content spending. While revenue grew approximately 10% year-over-year, management guided to slower net subscriber additions in North America and Europe after recent price increases, and margins were pressured by elevated investment in live sports and international content. |
| NKE | Notable positive contributions from the Fund's short book in December include National Vision Holdings, Nike, and Starbucks. |
| 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. |
| SPGI | Leading rating agency and data provider S&P Global Inc. contributed to performance. Shares rebounded from a pullback in September that stemmed from a competitor's cautious commentary around market demand and margins. S&P Global alleviated these concerns by delivering strong third quarter results and raising its full-year financial guidance. |
| V | There were companies there such as Visa, which we own, as well as many we do not, and which would not likely be appropriate for this mandate. |
| WM | Waste Management (WM) is the largest integrated waste collection, transfer, and disposal company in North America. Its large active weight in the Fund reflects our confidence in the business. WM's unmatched landfill and transfer station network creates formidable barriers to entry, supporting durable pricing power and steady cash flows. We view the company as uniquely positioned to enhance returns through landfill gas capture and automation investments that improve efficiency, margins, and long-term profitability. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
