| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.2% | -11.2% | -11.2% |
SGA's U.S. Large Cap Growth portfolio returned -11.1% gross in Q1 2026, underperforming the Russell 1000 Growth Index return of -9.8%. The relative shortfall was driven by AI disruption fears that dominated markets, with software stocks declining roughly 25% year-to-date following new product releases from Anthropic. The portfolio was negatively impacted by the continued divergence between AI CapEx beneficiaries and perceived AI losers in software. However, relative performance improved in March as geopolitical risks resurfaced with the Iran War, leading to more cautious investor sentiment and greater appreciation for predictable growth companies. SGA maintains that AI presents a double-edged sword, creating uncertainty but also opportunities for well-positioned market leaders. The firm exited positions in Gartner and UnitedHealth due to fundamental deterioration while initiating a new position in Mastercard. Despite near-term headwinds, the portfolio continues to compound revenues and earnings in line with estimates, expected to generate 13% revenue and 19% earnings growth over the next three years. The portfolio's valuation relative to the market has rarely been better in the firm's 23-year history, creating what SGA believes is an attractive opportunity for long-term investors.
SGA builds high-conviction portfolios focused on quality growth businesses that are anticipated to achieve consistent mid-teens earnings growth with reduced variability, supported by predictable revenue and cash flow generation, with the goal of protecting and reliably compounding client wealth over time.
SGA believes the conditions for a meaningful rotation towards quality compounders are building as energy headwinds mount and the AI investment cycle matures. The portfolio's valuation relative to the market has rarely been better in the firm's 23-year history, creating an attractive opportunity. They have high-conviction in their positioning and believe it sets the stage for attractive risk-adjusted returns in the quarters ahead.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 28 2026 | 2026 Q1 | ARM, CP, CRM, INTU, IT, MA, MSFT, UNH, WM | AI, disruption, Geopolitical, growth, Quality, software, technology, valuation |
ARM CP WM MSFT INTU CRM MA |
SGA's U.S. Large Cap Growth portfolio declined 11.1% in Q1 2026, underperforming due to AI disruption fears that hammered software stocks. The firm maintains conviction in quality growth businesses trading at historically attractive valuations relative to the market. Portfolio fundamentals remain strong with expected 13% revenue and 19% earnings growth over three years, positioning for attractive risk-adjusted returns ahead. |
| 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 |
SGA's quality growth strategy faced headwinds in 2025's extreme momentum market favoring cyclical and speculative stocks over stable compounders. Despite 3.7% returns versus 18.6% for Russell 1000 Growth, portfolio fundamentals remained strong with 12% earnings growth. Relative valuations at inception lows create attractive asymmetric opportunity as AI CapEx moderates and momentum inevitably reverses toward quality. |
| Sep 30 2025 | 2025 Q3 | AAPL, ABBV, AMZN, AON, ARM, AVGO, AXP, CMG, COO, CP, CRM, DHR, ECL, GOOGL, GWW, INTU, IT, JNJ, META, MSFT, NFLX, NKE, NOW, NVDA, NVO, ORCL, PLTR, SNPS, SPGI, TSLA, UNH, V, WCN, WDAY, WM, YUM | AI, growth, large cap, momentum, Quality, technology, underperformance, valuation | - | SGA's quality growth strategy underperformed in Q3 as momentum and AI speculation dominated markets. Quality stocks hit 10-year lows versus broader markets, creating attractive long-term opportunities as valuation premiums compressed significantly. The manager maintains conviction that current market extremes favoring lower-quality cyclicals over predictable growth companies represent cyclical deviation rather than structural change. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI disruption fears dominated the market in Q1, with software stocks declining roughly 25% year-to-date as new product releases from Anthropic stirred fears about business model durability. SGA believes AI presents a double-edged sword, creating uncertainty but also opportunities for well-positioned market leaders with trusted partner positions. |
Software Disruption Enterprise Automation Agentic |
SoftwareSoftware stocks were among the hardest hit during Q1, declining roughly 25% year-to-date due to AI disruption fears. SGA maintains that their software holdings like Salesforce, ServiceNow, Microsoft, and Intuit are highly entrenched incumbents managing mission-critical workflows that are difficult to replicate through AI. |
Enterprise SaaS Mission Critical Incumbents Workflows | |
QualitySGA emphasizes their focus on high-quality businesses with strong balance sheets, durable cash flows, and diversified end markets that provide resilience to short-term geopolitical shocks. The portfolio continues to compound revenues and earnings in line with estimates despite market volatility. |
Balance Sheets Cash Flows Resilience Compounding Fundamentals | |
GrowthThe portfolio is expected to generate 13% revenue and 19% earnings growth over the next three years. SGA continues to focus on companies anticipated to achieve consistent mid-teens earnings growth with reduced variability, supported by predictable revenue and cash flow generation. |
Earnings Revenue Predictable Consistent Mid-teens | |
| 2025 Q4 |
AIArtificial intelligence enthusiasm supported large-cap growth companies and drove strong corporate earnings, particularly in technology. AI-related investment has been a major contributor to recent growth but is expected to slow from exceptionally fast levels. Much of today's technology-led earnings growth is supported by long-term capital investment in AI, energy, and infrastructure. |
Technology Investment Growth Infrastructure Capital |
EarningsStrong corporate earnings drove market gains, particularly in technology and communication services. Current valuation levels suggest returns will depend more on earnings durability and cash-flow generation than on further multiple expansion. Continued earnings growth in the low-double-digit range is expected to support market performance. |
Corporate Technology Growth Valuation Cash Flow | |
RatesThe Federal Reserve cut rates by 25 basis points in December, bringing the policy rate to 3.5%-3.75%. The Fed cut rates three times in 2025 and currently expects one more cut in 2026. Markets are pricing in roughly two additional cuts, which would bring the Fed funds rate to around 3%. Higher yields have improved income potential with the 10-year Treasury yield ending at 4.18%. |
Federal Reserve Policy Treasury Income Monetary | |
DollarA weaker U.S. dollar, down 9.4% in 2025, provided a notable tailwind for foreign assets. The dollar decline helped boost international equity returns, with European equities gaining 35.4% and emerging markets rising 33.6% in U.S. dollar terms. Most of the international outperformance occurred in the first quarter, helped by the nearly 10% decline in the dollar. |
Currency International Foreign European Emerging Markets | |
VolatilityInvestor confidence has improved since April's tariff episode, reflected through a meaningful decline in market volatility in both stock and bond markets. The VIX and MOVE indices spiked after President Trump's tariff announcement but have since moved back to levels associated with more stable markets. Lower volatility reflects less anxiety around trade policy and Fed policy, supporting investor confidence. |
Market Confidence Trade Policy Stability Risk | |
| 2025 Q3 |
AIAI infrastructure buildout remains a dominant market force driving speculation and momentum trading. While AI benefits some portfolio companies like Nvidia, Microsoft, Alphabet, Meta, and Amazon, the manager warns of bubble dynamics similar to the dot-com era. Historical parallels suggest infrastructure beneficiaries may face disappointment while long-term winners emerge later as companies building services on top of infrastructure. |
Infrastructure Speculation Productivity Capex Bubble |
QualityQuality stocks have underperformed significantly and are at a 10-year low relative to the broader market. The manager views this as a cyclical deviation rather than structural weakness, creating attractive opportunities for long-term investors. Quality's valuation premium has compressed from 15% to 7%, approaching Covid-era lows. |
Underperformance Valuation Cyclical Opportunity Premium | |
MomentumPrice momentum has been performing exceptionally well, comparable only to the TMT Boom period. Lower-quality cyclical and speculative stocks have delivered outsized returns while defensive and predictable companies have lagged. The current environment represents extreme momentum-chasing and FOMO behavior. |
Speculation Cyclicals FOMO Extremes TMT |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 28, 2026 | Fund Letters | SGA - U.S. Large Cap Growth | ARM | Arm Holdings | Semiconductors | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | AI, data center, embedded systems, hyperscalers, Mobile computing, Power Efficient, royalty model, semiconductors | Login |
| Apr 28, 2026 | Fund Letters | SGA - U.S. Large Cap Growth | CP | Canadian Pacific Kansas City | Railroads | Railroads | Bull | New York Stock Exchange | Cross-border Trade, freight transportation, margin expansion, Nearshoring, Psr, railroad, share repurchase, Tri-national Network | Login |
| Apr 28, 2026 | Fund Letters | SGA - U.S. Large Cap Growth | WM | Waste Management | Waste Management | Environmental & Facilities Services | Bull | New York Stock Exchange | defensive, environmental services, Free Cash Flow, Landfill Infrastructure, Pricing power, RNG, vertically integrated, waste management | Login |
| Apr 28, 2026 | Fund Letters | SGA - U.S. Large Cap Growth | MSFT | Microsoft | Software - Infrastructure | Software | Bull | NASDAQ | AI investments, Azure, capital intensity, Cloud computing, Enterprise software, Productivity Suite, recurring revenue, technology integration | Login |
| Apr 28, 2026 | Fund Letters | SGA - U.S. Large Cap Growth | INTU | Intuit | Software - Application | Software | Bull | NASDAQ | AI disruption, financial software, GenAI, QuickBooks, recurring revenue, SMB Accounting, Tax software, TurboTax | Login |
| Apr 28, 2026 | Fund Letters | SGA - U.S. Large Cap Growth | CRM | Salesforce | Software - Application | Software | Bull | New York Stock Exchange | Agentforce, Agentic AI, bookings growth, Cloud software, CRM Software, Enterprise software, recurring revenue, share repurchase | Login |
| Apr 28, 2026 | Fund Letters | SGA - U.S. Large Cap Growth | MA | Mastercard | Credit Services | Data Processing & Outsourced Services | Bull | New York Stock Exchange | asset-light model, digital payments, Electronic Commerce, Global network, payment processing, Pricing power, Regulatory risk, Transaction Volume | Login |
| 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 |
|---|---|
| ARM | Arm Holdings was a top contributor to returns during the quarter. Shares responded positively following strong fiscal third quarter results, with revenue and royalty growth exceeding expectations, driven by accelerating data center adoption, and rising penetration of Arm's CSS platform in smartphone, automotive, and infrastructure segments. Management reiterated confidence in sustaining approximately 20% royalty growth longer term, reinforcing the market's confidence in Arm's structural growth profile. |
| CP | CPKC was a contributor to performance during the quarter, as solid operational execution helped offset end-of-year volume softness. While certain end markets such as automotive, forest products, and intermodal remained pressured by macro factors and supply chain disruptions, strong Precision Scheduled Railroading (PSR) execution drove meaningful margin strength. CPKC's unique tri-national network spanning the U.S., Canada, and Mexico, positions the company to benefit disproportionately from an eventual freight and industrial demand recovery. |
| WM | Waste Management (WM) was a top contributor to returns during the quarter after reporting solid quarterly results. The company's vertically integrated asset base, particularly its ownership of scarce landfill and transfer station infrastructure, continued to support pricing growth above cost inflation, driving margin-accretive growth in a mixed macro environment. With capital spending on high-return renewable natural gas (RNG) investments beginning to roll off while the profit contribution starts to ramp up, we have high visibility to strong free-cash-flow growth the next few years. |
| MSFT | Microsoft was a detractor from performance during the quarter as investor expectations around cloud acceleration and AI-driven upside moderated. While revenue grew 15% and EPS was up 21% in constant currency, Azure growth modestly missed elevated expectations, and management commentary suggested cloud growth is being actively managed through capital allocation rather than demand constrained. We believe Microsoft's entrenched enterprise position, recurring revenue base, and deep integration across productivity, cloud, and security provide significant long-term advantages that are difficult to replicate. |
| INTU | Intuit was a detractor from performance during the quarter amid AI disruption fears and to a lesser degree, uncertainty surrounding potential credit card regulatory changes that might impact advertiser spending on its Credit Karma platform. Despite the near-term uncertainty, Intuit's resilience is supported by the recurring, legally required nature of tax filing and the essential role of QuickBooks for SMB financial records. The company's proprietary data, strong retention, and deep integration across consumer and small business workflows position it well to embed AI across its software suite in ways that enhance, rather than displace, its core products. |
| CRM | After being a top contributor in Q4, Salesforce was a detractor from performance during the quarter as investor sentiment remained cautious following a quarter that merely met its guidance targets. While retention rates remain high and net new annual order value has accelerated, the company did not deliver a Q4 beat, and management's guidance left near-term growth expectations ambiguous and subdued for the first half of the fiscal year. Despite the market's perceived AI disruption risk, Salesforce's core franchises remain highly embedded with strong renewal rates. |
| MA | We initiated a new position in Mastercard, a leading global payments company, with a highly scalable, asset-light business model, strong brand equity, and exposure to long-term secular growth in electronic payments globally. In January, President Trump's announced support for a 10% cap on credit card interest rates, which along with the proposed Credit Card Competition Act (CCCA) created a share price dislocation, offering us an attractive entry point into a high quality earnings compounder. |
| IT | During the quarter we made the decision to exit our position in Gartner after another disappointing quarter and several interactions with management which led us to conclude that the company's priorities and actions did not align with the strategic direction we had advocated for. Over the past year growth decelerated, which we ascribed largely to political and macroeconomic factors such as efforts by DOGE and tariff-related disruptions. However, the company has continued to miss targets for Contract Value since, and we have become increasingly concerned about market saturation. |
| UNH | Our position in UnitedHealth was based on our view that the company would deliver durable growth due to its ability to manage the rising healthcare costs given its scale advantages. However, when the CMS released their preliminary rate for 2027 this quarter of just 0.1%, we, and the market, were disappointed. While the final rate has since been revised higher to 2.5%, this is still below the mid-single digit rate expectations and cost inflation trends. Given these developments we decided to exit the position and re-allocate the capital into higher conviction growth opportunities. |
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