Investor Summary
Fund Strategy
FUND PERFORMANCE AS OF 31st December 2025
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
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| - | - | - |
8th Wonder Investments completed its inaugural year with mixed results, highlighted by a successful special situation investment in Warner Bros. Discovery that nearly doubled following a bidding war between Netflix and Paramount. The fund's core thesis centers on concentrated positions in exceptional businesses led by outsider CEOs, with top five holdings representing 42% of the portfolio. While consumer discretionary names and mid-caps lagged during a strong mega-cap rally, the manager views recent volatility as creating generational opportunities. Constellation Software and Topicus, the fund's largest combined position, declined over 45% following leadership transition concerns and AI disruption fears, prompting additional purchases at what management considers attractive valuations. The portfolio employs covered call strategies on less than 50% of holdings to generate income and reduce volatility. Key holdings include HEICO in aerospace aftermarket, RH in luxury retail, and vertical market software consolidators. Despite near-term headwinds, management remains optimistic about long-term compounding potential in businesses designed to thrive through cycles and benefit from secular growth trends.
8th Wonder Investments focuses on exceptional CEOs running antifragile businesses with secular growth, emphasizing concentrated positions in companies with strong competitive moats, disciplined capital allocation, and the ability to compound shareholder value over decades.
The manager expresses excitement about long-term prospects despite recent performance headwinds, viewing current dislocations as generational buying opportunities in proven compounders like Constellation Software and Topicus.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 29 2026 | 2025 Q4 | AAPL, AMZN, CMCSA, CRM, CSU.TO, DECK, DIS, GOOGL, HEI, LYV, META, MSFT, NFLX, NVDA, PARA, RH, SKX, TOI.TO, TSLA, WBD | aerospace, AI, Leadership, Luxury, M&A, Media, software, value |
WBD HEI RH CSU CN TOI CN |
Warner Bros. Discovery represents a special situation investment driven by CEO David Zaslav's shift toward shareholder value creation and aggressive debt paydown. The company announced… |
| 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 |
Capital MarketsCapital markets are wide open with elevated levels of debt issuance, equity offerings, and M&A volumes. Falling interest rates, rising equity prices, and improving corporate confidence are driving an optimistic outlook for deals, which should benefit advisory firms, rating agencies, and alternative asset managers. |
Investment Banking M&A Debt Issuance Advisory Alternative Assets | |
LuxuryNew investment in Swatch represents exposure to luxury watch brands including Omega, Longines, Tissot, and others. The investment thesis is based on tangible assets including Swiss real estate and the potential for operating leverage when luxury demand recovers from current structural pressures. |
Watches Swiss Brands Premium Recovery | |
MediaWarner Bros Discovery was the top contributor as multiple parties submitted acquisition offers, with Netflix acquiring the Streaming and Studios business while Global Networks spins to shareholders. Paramount Skydance made a $30 per share offer for the entire company, creating a bidding war that unlocked shareholder value. |
Streaming M&A Content Entertainment Bidding | |
SpaceSpaceX represents the fund's largest position at 12.5% of net assets, generating significant value through rapid expansion of Starlink broadband service and establishing itself as a leading launch provider with reusable technology. The company is making tremendous progress on Starship, the largest most powerful rocket ever flown. |
Satellites Launch Services Broadband Aerospace Rockets | |
Vertical SoftwareConstellation Software and Topicus represent the core thesis of acquiring mission-critical vertical market software businesses with high switching costs, recurring revenue, and defensive moats. These businesses serve niche markets where switching is painful and alternatives offer minimal benefits. |
Acquisitions Recurring Revenue Switching Costs Niche Markets Mission Critical |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 29, 2026 | Fund Letters | Daniel Bellehsen | WBD | Warner Bros. Discovery, Inc. | Communication Services | Media & Entertainment | Bull | NASDAQ | Free Cash Flow, Incentives, Media Deleveraging, rerating, Special Situation | Login |
| Jan 29, 2026 | Fund Letters | Daniel Bellehsen | HEI | HEICO Corporation | Industrials | Aerospace & Defense | Bull | New York Stock Exchange | Aerospace Aftermarket, Antifragile, compounding, Decentralization, ROIC | Login |
| Jan 29, 2026 | Fund Letters | Daniel Bellehsen | RH | RH | Consumer Discretionary | Home Furnishings | Bull | New York Stock Exchange | capital allocation, Experiential Retail, founder-led, Luxury Brand, Margins | Login |
| Jan 29, 2026 | Fund Letters | Daniel Bellehsen | CSU CN | Constellation Software Inc. | Information Technology | Application Software | Bull | New York Stock Exchange | Acquisitions, compounding, Decentralization, Free Cash Flow, vertical software | Login |
| Jan 29, 2026 | Fund Letters | Daniel Bellehsen | TOI CN | Topicus.com Inc. | Information Technology | Application Software | Bull | Euronext Stock Exchange | Acquisitions, European Software, growth, recurring revenue, VMS | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | AAPL shares rose in 4Q25 following better-than-feared iPhone 17 sell-through trends and stronger Services momentum. The company reported that early adoption of its on-device AI features exceeded internal expectations, particularly in North America and Europe, where attach rates for Pro models remained elevated. Wearables also returned to growth, helped by new health features and improved battery life. |
| AMZN | This quarter, we took profits in our hyperscaler portfolio companies (Amazon and Google) and increased our position in NVIDIA. |
| CMCSA | Within the portfolio, stocks like AutoZone, Comcast, and Zoetis were all punished for having perceived headwinds to already lowered expectations for growth. |
| 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. |
| CSU.TO | Broad pressure on the stocks of software companies enabled us to initiate a position in Constellation Software. This is a unique business we had on our radar for a long time but were never able to purchase due to its high valuation. At its core, the company is a permanent capital vehicle designed to acquire 'vertical market software' (VMS) businesses and hold them indefinitely. |
| DECK | Deckers Outdoor designs, markets and distributes footwear and apparel, including the Hoka (running shoes) and UGG (casual luxury cold-weather shoes) brands. DECK stock declined after it posted disappointing results early in 2025, which were impacted by tariff uncertainty, a warehouse transition in Europe, and warm weather during the early part of the UGG selling season. As Hoka expands internationally, we expect growth to re-accelerate and believe the company will use its strong balance sheet, including net cash equal to roughly 9% of its market capitalization, to increase the pace of stock repurchases. |
| DIS | We sold our long-term holding in Disney, reflecting our view that consumer discretionary spending could remain under pressure if cost-of-living conditions stay tight, especially at a time when the company is spending significantly on Parks and Resorts. |
| 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. |
| HEI | We've held HEI since early 2021. It's one of those quietly excellent family businesses. The Mendelsons have run it for decades, they own a meaningful stake, and they've built durable niches in aerospace parts and defense electronics. HEI was up 36% in 2025, hitting new highs on strong results across both their Flight Support and Electronic Technologies divisions. They keep doing what they do: disciplined acquisitions, high returns on capital, strong cash generation. |
| LYV | The ticketing operator delivered a mixed but broadly encouraging update, although some divisions saw a slowdown in profit growth. |
| 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. |
| NVDA | Capital spending from Google, Microsoft, Amazon, Meta, OpenAI, and more have led to Nvidia becoming the Rrst 5 trillion market cap company. |
| PARA | Paramount's high-profile hostile takeover bid to acquire Warner Brothers Discovery in December 2025 only fuels the comparisons between the current cycle and the late 1990s dot-com bubble. |
| RH | A different kind of opportunity defines our largest position today: RH (formerly Restoration Hardware), where key man risk is undeniably higher but so is the upside. We view Gary Friedman, RH's Chairman and CEO since 2001, as a future outsider. He's one of today's most exceptional leaders, blending world-class capital allocation with profound creative genius. Gary rescued RH from near-bankruptcy, reimagining it as a luxury lifestyle brand with galleries that redefine retail. Under his watch, revenues soared from $200 million to over $3.7 billion, with EBITDA margins expanding to 30%. |
| TOI.TO | Detracting from performance were holdings of Constellation Software and spinoff Topicus despite strong underlying earnings amid concerns that AI could affect their software offerings |
| TSLA | Under the previous system, companies that produced only electric vehicles—most notably Tesla—generated large quantities of credits that could then be sold to manufacturers falling short of their EV production targets, allowing them to avoid regulatory penalties. |
| WBD | Warner Bros Discovery (WBD) was the top contributor during the quarter. The U.S.-headquartered media company's stock price surged as multiple parties submitted offers to acquire all or part of the business. Following several rounds of bidding, WBD announced an agreement to sell its Streaming and Studios business to Netflix, while spinning the Global Networks business to shareholders. Paramount Skydance subsequently made a direct $30 per share offer to shareholders for the entire company. We are pleased with the steps the WBD board has taken thus far to unlock shareholder value. We will continue to closely monitor developments as this bidding war unfolds. |
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