| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 13.4% | 3.3% | 0.3% |
The Osterweis Opportunity Fund returned 3.3% in Q4 2025, outpacing the Russell 2000 Growth benchmark's 1.2% return, though lagging for the full year at 0.3% versus 13% for the Russell. 2025 was characterized by thematic investing rather than fundamentals, with AI, flying taxis, quantum computing, and biotech driving returns regardless of company quality. The manager deliberately avoided speculative investments, maintaining focus on profitable, rapidly growing companies with secular tailwinds. Key contributors included semiconductor investments MACOM and SiTime, which benefited from AI-driven data center demand, and Fintech leader Chime with 30%+ revenue growth. Healthcare holdings like Guardant Health also performed well with strong oncology diagnostics growth. Looking ahead, the manager expects a return to fundamentals-driven markets and remains optimistic about growth opportunities across five secular trends: AI, Drones, Robotics, Liquid Biopsies, and Fintech. The portfolio is positioned to benefit from this transition while avoiding the unsustainable returns generated by speculative companies.
Focus on profitable, rapidly growing small cap companies benefitting from secular tailwinds while avoiding speculative investments, positioning for a return to fundamentals-driven markets after a year dominated by thematic investing.
The manager is optimistic that fundamentals will once again be the primary driver of returns in the small cap growth market. They believe there are plenty of growth areas in the economy for 2026 and beyond, focusing on five secular trends: AI, Drones, Robotics, Liquid Biopsies, and Fintech. The firm remains laser-focused on finding category leaders in each sector before they become widely discovered.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 27 2026 | 2025 Q4 | AX, BIRK, CAVA, CECO, CWST, FSV, GH, GWRE, LSCC, LTH, MOD, MTSI, NOVT, SITM, TREX, TTAN, WAY | AI, Biotech, Fintech, growth, healthcare, semiconductors, small cap, technology | - | AI was identified as one of the big investment themes driving 2025 returns, with the AI boom propelling many indices to all-time highs. SiTime Corp… |
| 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 |
DronesFlying taxis were mentioned as one of the speculative investment themes that drove 2025 returns, though the manager deliberately avoided these speculative companies. Drones were also identified as one of the top five secular trends for the near-to-medium term in the manager's recent publication. |
Aerospace Technology Innovation Transportation | |
FinTechThe fund continues its growth approach to investing in financial and financial-related companies, including payment businesses, financial exchanges, and data providers that enable financial transactions. The common denominator across all holdings is the use of technology and data to better serve customers and grow at above-average rates. |
Payments Digital Banking Financial Technology Data Analytics Financial Software | |
OncologyGuardant Health, a provider of blood-based diagnostic tests for cancer, was a significant contributor with strong Q3 results. The core oncology business grew revenues 30% with acceleration driven by innovative product enhancements. The company continues to lead the charge in converting oncology testing from tissue to blood, representing a major shift in cancer diagnostics. |
Biotechnology Diagnostics Healthcare Innovation Growth | |
RoboticsRobotics was identified as one of the manager's top five secular trends for the near-to-medium term. This represents an area of focus for finding category leaders before they become widely discovered, though specific robotics investments were not detailed in this letter. |
Automation Technology Industrial Innovation | |
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 |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| BIRK | The biggest laggard in the Consumer Discretionary sector was footwear manufacturer Birkenstock, which provided guidance for fiscal year 2026 that was below expectations, despite reporting a strong third quarter that exceeded both top- and bottom-line estimates. The company cited production constraints, which would limit volume growth to ~10%, and a shift to selling through wholesalers, as customers now prefer buying in-store versus online. We believe the softer Q3 guidance will prove to be conservative and the stock is set up for a solid 2026. |
| CAVA | CAVA, the Mediterranean restaurant chain, was the top performer in the Consumer Discretionary sector in the fourth quarter. The stock was under pressure for much of 2025, along with the entire restaurant industry, due to slowing growth trends. But CAVA's sales stabilized in the fourth quarter, prompting investors to recognize they had become too negative, and the share price rebounded nicely. Looking ahead, CAVA is planning to expand to 1,000 units in the United States by 2032, which is a solid growth target relative to its current base of ~450. |
| CECO | Within Industrials, CECO Environmental, a provider of equipment to treat wastewater and contaminants at manufacturing and power plants, once again led performance in the sector. The company reported strong order growth in Q3, again eclipsing $200 million, while revenues grew 45% annually. Additionally, late in the quarter the company announced a large $135 million order for a Texas power facility, suggesting Q4 orders should be over $300 million. We remain excited about the momentum in the business, and we believe it is an excellent way to gain exposure to high-growth areas of the economy like power generation, reshoring, and water management. |
| CWST | The fortunes of Casella Waste Systems waxed and waned during the quarter. At the beginning of the quarter, Casella's shares slipped ahead of its fiscal quarterly report. After showing revenues and earnings higher than anticipated, along with better full-year guidance, its share price recovered and ended the quarter up 3% for this provider of solid waste collection, transfer, disposal, and recycling services for residential, commercial, municipal, and industrial customers. |
| FSV | Our lone position in Real Estate during the fourth quarter, FirstService, was the portfolio's largest negative contributor. The company specializes in residential management and storm restoration, but it struggled following a soft Q3, as its newly acquired commercial roofing business experienced a slower than expected conversion of its backlog. Additionally, certain large projects have been on hold following a volatile macro environment. This has been happening for several quarters, and the lack of progress has been disappointing. We expect growth to bottom in Q4 and then pick back up, driven by expansion in its remaining business lines. |
| GH | Guardant Health, a provider of blood-based diagnostic tests for cancer, performed particularly well, driven by strong Q3 results. Its core oncology business grew revenues 30% vs. 20% in the previous quarter, an acceleration driven by innovative product enhancements. Furthermore, its colon cancer screening tests continued to perform well, growing 50% sequentially from Q2. While shares were up significantly in 2025, we remain bullish on the business, as Guardant continues to lead the charge in converting oncology testing from tissue to blood. |
| GWRE | Shares of P&C insurance software vendor Guidewire Software, Inc. declined during the quarter following strong gains earlier in the year, as the broader software sector came under pressure. After a multi-year transition period, we think Guidewire's cloud migration is largely complete. We believe cloud will be the sole path forward, with annual recurring revenue benefiting from new customer wins and migrations of existing customers to InsuranceSuite Cloud. |
| LSCC | We also bought a position in Lattice Semiconductor, which is an under-appreciated AI winner with a combination of immediate AI gains and longer-term AI optionality. Lattice's focus on efficiency and tangible advantages in low-power, small footprint FPGAs position it favorably for winning in unique functions that are mission critical to AI servers. It has a history in deploying these chips for security functions and critical to our thesis, these chips have been spec'd into all of the hyperscaler server architectures as the Root of Trust chip. Importantly, Lattice's FPGAs are the only Post-Quantum Cryptography secure chips on the market. |
| MTSI | Semiconductor holding MACOM Technology Solutions rose nearly +40%, as the company experienced broad-based demand, similar to many semiconductor companies in 2025. |
| NOVT | Novanta (NOVT) supplies proprietary precision components and systems used in mission-critical medical and advanced industrial applications. |
| SITM | SiTime Corp (SITM) was the largest contributor to our long book during the fourth quarter. SiTime is the leading provider of precision timing solutions to the global electronics industry. Personal electronics including your phone, computer, and car require extremely precise clocks to keep everything in sync. So too, do AI data centers. Traditionally, companies used quartz crystals, however, Micro-Electro-Mechanical System oscillators, like the ones SiTime produces, are smaller, more precise, and easier to program. SiTime is a leading provider with a primary focus on precision timing applications. Although the total addressable market is relatively small ($4.5 billion oscillators, $4.5 billion resonators, and $2 billion clocks with $315 million in estimated FY 2025 revenues), we believe SiTime has excellent growth potential. We believe CEO Rajesh Vashist's execution has been strong, and the company's Communications, Enterprise and Datacenter ("CED") segment sales grew 115% year-over-year in Q3 2025. This is the sixth consecutive quarter of triple-digit growth in CED, a segment that represents slightly more than 50% of consolidated sales. In a response to a question on the Q3 call regarding the sustainability of growth from the data center ecosystem, Rajesh said, "we are in the early innings … we're selling to semiconductor companies, hyperscalers, OEMs, ODMs, module makers and active cable makers. SiTime has an embarrassment of riches." While we are bullish on SITM's prospects, its recent appreciation took the stock to a valuation where we no longer saw material upside, and we exited the position. |
| TREX | TREX Company, a leader in composite decking, was our biggest laggard in Industrials during the fourth quarter, as an increasingly competitive environment and weaker end-market trends led to poor Q3 results. TREX saw business fall off after Labor Day, which is inconsistent with results from other peers and surveys. It was quite surprising and may be a function of its higher DIY business. Regardless, this contradicts our thesis, so we exited the position. |
| TTAN | ServiceTitan is a leading provider of vertical software solutions for the trades, including plumbing, HVAC and electrical. Its platform supports the entire workflow from lead generation to payment, generating revenue through subscriptions and usage-based processing. We see meaningful growth opportunities through new customer acquisition, upselling and expansion into additional trades. During the quarter, we increased our position following a pullback amid broader software industry weakness, reflecting our conviction in the durability of its profit cycle. |
| WAY | Offsetting these gains were negative returns from Waystar |
| 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 | |||
