| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.9% | 1.2% | -8.5% |
Baird Small/Mid Cap Growth strategy returned +1.18% net in Q4 2025, outperforming the Russell 2500 Growth Index's +0.33% return, though the strategy significantly lagged for the full year with -8.54% versus +10.31% for the benchmark. Healthcare was the strongest contributor with holdings up nearly 16%, led by Exact Sciences' acquisition by Abbott Laboratories for an 86% quarterly return. Technology also contributed positively, with Twilio reporting better-than-expected results and MACOM Technology Solutions rising nearly 40% on broad-based semiconductor demand. The team made several portfolio changes, exiting Astera Labs and DraftKings while initiating positions in Credo Technology, Curtiss-Wright, and EMCOR Group. Looking forward, the managers acknowledge two years of underperformance and have refined their team structure while remaining committed to their high-quality growth philosophy. They are seeing evidence of improvement when market leadership broadens and fundamentals are rewarded, particularly noting moderation in AI-related momentum that creates a healthier setup for their strategy.
Baird maintains disciplined focus on underwriting durable growth, emphasizing high-return businesses with strong balance sheets while remaining committed to their high-quality growth philosophy despite recent underperformance.
The team acknowledges that results over the past two years have fallen short of benchmark and standards, recognizing elevated scrutiny. They have refined team structure and are laser-focused on execution around their long-standing investment philosophy. They are seeing evidence of improvement in how the portfolio responds when market leadership broadens and fundamentals are rewarded, while observing pockets of decoupling that are consistent with a healthier setup for their strategy.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Feb 3 2026 | 2025 Q4 | ABT, AFRM, BOOT, BRBR, BROS, BURL, BWXT, CASY, CHDN, COCO, CRDO, CW, DKNG, DT, ELF, EME, EXAS, FOUR, GKOS, KTB, LII, MASI, MNDY, MTSI, PEN, PODD, RGEN, RKLB, TARS, TWLO, ULS, VERX, WAY, WSO | AI, defense, growth, healthcare, mid cap, semiconductors, small cap, technology | - | The 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… |
| Nov 8 2025 | 2025 Q3 | - | AI, momentum, Quantum Computing, semiconductors, volatility | - | The quarter was defined by extreme AI-driven market distortion, with speculative surges in semiconductors, quantum computing, and related themes overshadowing fundamentals. High-quality, earnings-driven stocks lagged… |
| Aug 4 2025 | 2025 Q2 | - | industrials, Market Volatility, stock selection, technology | - | - |
| Mar 31 2025 | 2025 Q1 | 1953345D LN, BWXT, FOUR, JNJ | - | - | - |
| Jan 20 2025 | 2024 Q4 | ALAB, MASI, PSTG | - | - | - |
| Oct 30 2024 | 2024 Q3 | ALAB, BMI, BSY, CACI, CYBR, LW | - | - | - |
| Jun 30 2024 | 2024 Q2 | AAON, APPF, CACI, DECK, HEI, MANH, POOL, RGEN, VERX, XPEL, ZBRA | - | - | - |
| Mar 31 2024 | 2024 Q1 | - | - | - | - |
| Dec 31 2023 | 2023 Q4 | - | - | - | - |
| Sep 30 2023 | 2023 Q3 | - | - | - | - |
| Jun 30 2023 | 2023 Q2 | - | - | - | - |
| 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 |
Data CentersSupply constraints curtailing infrastructure buildout rate, but compute capacity is being used immediately upon coming online. This differs from dot-com bubble when dark fiber was installed ahead of need. Labor, power and land shortages creating bottlenecks. |
Supply Constraints Utilization Bottlenecks Infrastructure | |
DefenseThe team initiated a position in Curtiss-Wright, believing the company is entering a period where multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
Defense Budgets Aerospace Nuclear Submarines | |
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 | |
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 |
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 |
| 2025 Q2 |
Technology |
|
VolatilityU.S. equity valuations remain elevated while market volatility remains unusually subdued given macro and geopolitical risks present. This combination has historically preceded periods of market disappointment characterized by rapid sell-offs and volatility spikes. |
Suppressed Elevated Valuations Sell-offs Spikes |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| ABT | Exact Sciences, which was acquired for a significant premium by Abbot Laboratories in November |
| AFRM | Positive returns from Affirm were not enough to offset the detractors |
| BOOT | Longer-term holdings such as Boot Barn increased, outperforming benchmark returns |
| BRBR | Our smallest position remains BellRing Brands, which is experiencing slower-than-expected growth due to increased competition. We added to the position, as we believe valuation has become more attractive and growth could improve in 2026. |
| BROS | Longer-term holdings such as Dutch Bros increased, outperforming benchmark returns |
| BURL | Longer-term holdings such as Burlington Stores increased, outperforming benchmark returns |
| BWXT | Positive returns from BWX Technologies were not enough to offset the detractors |
| CASY | We trimmed Casey's on strength, and the stock's roughly flat performance compared favorably with benchmark's sector returns, which declined nearly -11%. |
| CHDN | Longer-term holdings such as Churchill Downs increased, outperforming benchmark returns |
| COCO | Coconut beverage producer Vita Coco returned nearly +25% for the quarter on better-than-expected earnings and reduced concerns around potential tariff risks. |
| CRDO | During the quarter, we initiated a position in Credo Technology. Credo is a high-growth semiconductor company that we view as a more diversified way to gain exposure to strong trends in AI-connectivity. |
| CW | We initiated Curtiss-Wright, consistent with our high-quality growth orientation. We believe Curtiss-Wright is entering a period in which multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
| DKNG | We exited DraftKings due to concerns related to the Railbird acquisition and an increasingly complex competitive environment, including the proliferation of prediction markets. |
| DT | Dynatrace detracted from relative quarterly performance |
| ELF | e.l.f. Beauty's earnings report included a decline in core domestic sales growth and fiscal year guidance below expectations. We continue to hold the stock, as the company offers a strong product set addressing a favorable spending category, though additional progress is needed to restore positive fundamental and share-price performance. |
| EME | EMCOR Group is a critical contractor enabling multi-year investment cycles across data centers, semiconductor fabrication, electrification, and broader infrastructure modernization. Its decentralized, cash-generative model, recurring service base, and exposure to structural growth drivers create a profile we view as more durable than a typical cyclical contractor framework. |
| EXAS | The largest single contributor was Exact Sciences, which was acquired for a significant premium by Abbot Laboratories in November, resulting in an +86% return in the quarter for one of our higher-conviction positions. |
| FOUR | Relative weakness was also driven by Shift4 Payments |
| GKOS | Glaukos following approval of a new product |
| KTB | We identified Kontoor Brands (KTB) as a short opportunity following notable turnover within the company's leadership team. The departures of the EVP and COO came on the heels of a surprise CEO transition related to the acquisition of Helly Hansen. While some degree of management turnover is to be expected, we believe multiple senior departures occurring in close succession can signal underlying business challenges. We also view certain mergers and acquisitions as potential indicators that a company's core business may be under pressure. In our assessment, Kontoor paid a meaningful premium for the Helly Hansen acquisition, which we believe increases the risk that the transaction could ultimately prove value‑destructive. In addition, we believe industry data and brand‑level trends point to rising competitive pressures across Kontoor's portfolio. Taken together, we believe these factors increase the possibility of disappointing operating results and create risk that the stock could rerate lower should fundamentals continue to deteriorate. |
| LII | Relative weakness was also driven by Lennox amid softer HVAC trends |
| MASI | Offsetting these gains were negative returns from Masimo |
| MNDY | Monday.com detracted from relative quarterly performance |
| MTSI | Semiconductor holding MACOM Technology Solutions rose nearly +40%, as the company experienced broad-based demand, similar to many semiconductor companies in 2025. |
| PEN | Other strong performers in the quarter, primarily driven by strong earnings results, included Penumbra |
| PODD | Offsetting these gains were negative returns from Insulet |
| RGEN | Other strong performers in the quarter, primarily driven by strong earnings results, included Repligen |
| RKLB | Rocket Lab is an end-to-end space company which engages in the development of rocket launch and control systems for the space and defense industries. The company operates in two primary segments: Launch Services and Space Systems. Launch Services provides rides into orbit for small satellites with their Electron rocket. Space Systems designs and manufactures spacecraft components, satellite buses, and offers mission operations and other space solutions. The stock was up nearly 50% in the quarter on a strong set of earnings results and a growing backlog. While we initiated a position later in the quarter, the lack of exposure for the better part of the period meant the stock represented a detractor to relative performance. |
| TARS | Other strong performers in the quarter, primarily driven by strong earnings results, included Tarsus Pharmaceuticals |
| TWLO | The strongest performer was software company Twilio, which reported better-than-expected sales and improved gross margins, an area of concern in the prior quarter. The company proved to be an outlier in software, as the sector continues to digest investor concerns related to AI. |
| ULS | Positive returns from UL Solutions were not enough to offset the detractors |
| VERX | Vertex detracted from relative quarterly performance |
| WAY | Offsetting these gains were negative returns from Waystar |
| WSO | Relative weakness was also driven by Watsco amid softer HVAC trends |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
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| No industry data available | |||
