| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.0% | -6.2% | -7.9% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| -7.9% | 13.0% | 33.0% | -24.0% | 31.0% | 11.0% |
Fairlight Global Small & Mid Cap Fund delivered a disappointing -8% return in 2025, underperforming its benchmark by 18 percentage points. Two major themes drove underperformance: AI disruption fears caused sharp multiple contractions in several portfolio companies, estimated as an 8% hit to returns, while benchmark returns were propelled by cyclical sectors the fund avoids entirely. Despite challenging conditions, portfolio companies collectively grew revenues 6% and EPS 9%. The fund maintains its quality-focused approach, seeking businesses with outsized returns on capital, stable management, and conservative balance sheets. Recent portfolio changes included adding to Gartner and Copart while reducing positions in IDEXX and Medpace based on valuation. The fund trades at 19x forward earnings with strong fundamentals including 29% operating margins and 95% cash conversion. Management forecasts 12% portfolio earnings growth for 2026 and remains committed to the long-term investment process, with team members adding meaningfully to their own fund investments.
Focus on high-quality businesses with demonstrable track records of earning outsized returns on capital, available at attractive valuations, while avoiding cyclical and interest rate-sensitive sectors.
The manager forecasts portfolio earnings growth of 12% in 2026, in line with historical growth delivered by the Fund. They remain committed to the Fairlight investment process, believing longer-term they are best served by focusing on sectors where they are most likely to find high-quality operating businesses with earnings durability.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 20 2026 | 2025 Q4 | CPRT, DPLM.L, FDS, G24.DE, HLMA.L, IDXX, IT, MEDP, REC.MI, ULTA | AI, global, healthcare, Quality, small caps, technology, underperformance | IT | Several portfolio companies experienced sharp multiple contractions due to perceived higher risk of disintermediation from expected widespread adoption of Generative Artificial Intelligence. The manager estimates this was an 8% hit to returns, though believes the extent of recent derating is excessive given companies' successful track records of defending market leadership. The fund focuses exclusively on high-quality businesses with demonstrable track records of earning outsized returns on capital, stable management teams, conservative balance sheets, and avoiding single points of failure. Portfolio companies collectively grew revenues by 6% and EPS by 9% in 2025 despite challenging conditions. Healthcare represents 13% of portfolio exposure with holdings like IDEXX Laboratories in companion animal diagnostics and Medpace in clinical research. These companies benefit from recurring revenue models, market share gains, and structural industry growth tailwinds supporting improved diagnosis and drug development. |
| 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 |
HealthcareHealthcare was the strongest relative contributor in the quarter with holdings increasing nearly +16% compared to benchmark returns of roughly +12%. Exact Sciences was acquired for a significant premium by Abbott Laboratories resulting in an +86% return, while other strong performers included Tarsus Pharmaceuticals, Glaukos following approval of a new product, Penumbra, and Repligen driven by strong earnings results. |
M&A Product Approval Earnings Biotech | |
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 |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 20, 2026 | Fund Letters | Nicholas Cregan | IT | Gartner, Inc. | Information Technology | IT Consulting & Other Services | Bull | New York Stock Exchange | Advisory, AI, buybacks, Insiders, research | Login |
| TICKER | COMMENTARY |
|---|---|
| CPRT | we recently trimmed some of our mega-cap tech holdings and other outperformers and used the proceeds to buy more of our underperforming holdings such as Copart, Inc. |
| DPLM.L | Diploma delivered strong, broad-based performance, supported by multiple businesses benefiting from the build-out of high-performance computing and data center infrastructure. |
| FDS | 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. |
| HLMA.L | Halma consists of over 50 manufacturers operating in global niches within the safety, environmental and healthcare sectors. Halma's diversification, focus on differentiated products and exposure to structurally growing markets have allowed yearly profits to compound at a 15% rate for more than four decades, with low variability. We believe Halma is exceptionally well-managed and expect this growth to continue. Despite Halma's share price rising 32% in 2025, its valuation remains reasonable given the durability and quality of its growth. |
| IDXX | Veterinary diagnostics leader IDEXX Laboratories, Inc. contributed to performance after again reporting better-than-expected financial results. Foot traffic to veterinary clinics in the U.S. remains modestly negative but is poised to recover over the next several years. Even so, IDEXX's excellent execution has enabled the company to continue delivering robust performance. |
| IT | Gartner is a global leader in research services, with a long history of delivering valuable insights and data to business and technology leaders. In our view, the company has the best brand in IT research, supported by its scale and a compelling customer value proposition. These advantages have driven a long history of strong organic growth and robust free-cash-flow conversion. The stock price has declined meaningfully from recent highs due to investor concerns surrounding AI-related disruption. We believe these concerns are overstated. In our view, Gartner is well-positioned to reaccelerate organic growth due to continued high customer engagement and the large opportunity to sell to new and existing customers. We took advantage of the opportunity to buy shares in this well-managed company at a bargain price. |
| MEDP | Medpace was the Fund's largest contributor in H1 FY26, having been among its largest detractors over the prior 12 months. Medpace is a US-listed clinical research organisation focused on small biotechnology companies. After four consecutive quarters of elevated project cancellations, Medpace delivered a strong inflection in fundamentals, reporting very robust net bookings growth in Q2 and Q3 FY25, alongside stronger-than-expected guidance for FY26. |
| 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 | |||
