| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.6% | 17.74% | 12.14% |
The Baird Small/Mid Cap Growth strategy returned 17.7% net in Q2 2026, underperforming the Russell 2500 Growth Index's 24.0% return primarily due to factor exposures as high volatility, high beta, high momentum stocks significantly outperformed. AI remained the dominant investment theme, with hyperscale cloud providers increasing capital spending on data centers and infrastructure, driving historic semiconductor gains. The manager actively repositioned the portfolio, adding data center infrastructure exposure through AAON, Modine, Generac, and Centuri, while increasing software exposure with Agilysys. Consumer discretionary contributed positively with strong performance from Victoria's Secret, Crocs, and Kontoor Brands. The manager added three commercial-stage therapeutics companies to healthcare exposure. While acknowledging that rapidly rising AI expectations and concentrated market leadership suggest building risk, the manager is encouraged by broadening market participation beyond semiconductors. The philosophy remains unchanged: seeking high-quality businesses with durable competitive advantages while maintaining discipline and balancing opportunity against risk to produce better long-term investment outcomes.
The Baird Small/Mid Cap Growth strategy invests in high-quality, small and mid-cap growth companies with durable competitive advantages, attractive long-term growth opportunities, and capable management teams that can create value through changing market environments, maintaining discipline by balancing opportunity against risk rather than attempting to time market tops.
The manager maintains an optimistic but cautious outlook, believing AI has potential to create substantial long-term value across many industries while acknowledging that rapidly rising expectations and concentrated market leadership suggest risk is building in certain areas. The manager is encouraged by broadening market participation beyond semiconductors and data center infrastructure, which typically creates a healthier environment where company fundamentals play a larger role in determining outcomes. The philosophy remains unchanged, continuing to seek high-quality businesses with durable competitive advantages, attractive long-term growth opportunities, and capable management teams, with daily focus on improving portfolio quality and strengthening the risk/return profile.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Aug 25 2026 | 2026 Q2 | AFRM, AGYS, BE, BJ, CASY, COCO, CROX, CSD, DSGX, EME, FN, KNX, KTB, LFUS, OLLI, STNE, STRL, TWLO, VSCO, WING | AI, Biotechnology, consumer discretionary, Data centers, growth, semiconductors, SMID Cap, software | - | Baird Small/Mid Cap Growth returned 17.7% in Q2 2026 but underperformed the benchmark's 24.0% due to factor headwinds as AI-driven momentum stocks dominated. The manager actively repositioned into data center infrastructure and software while maintaining diversified consumer and healthcare exposure. Despite acknowledging building risk from concentrated AI leadership, the team sees broadening market participation creating healthier conditions for fundamental stock selection. |
| Apr 22 2026 | 2026 Q1 | ADMA, AFRM, ALGN, BMI, BRBR, BSX, BURL, CASY, CRBG, CROX, DHR, DXCM, ELF, EQH, EXAS, FIX, FN, FND, FOUR, FTAI, HLI, HUBB, ILMN, INSP, JBL, KNSL, KTOS, LFUS, LII, MASI, MTDR, NSA, PEN, PODD, PSA, RGEN, SOFI, TMDX, TTAN, TWST, VSCO, WWD, XPO | AI, defense, growth, healthcare, industrials, semiconductors, small caps, technology | - | Baird's SMID-cap growth strategy underperformed in Q1 2026 amid geopolitical volatility, declining 4.8% versus benchmark's 3.5%. Technology outperformed through semiconductor additions while industrials benefited from aerospace and AI infrastructure exposure. Active portfolio management included exiting software, adding semiconductors, and initiating new positions across industrials and healthcare. Portfolio remains well-positioned for opportunistic deployment during volatile periods. |
| 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 | - | Baird Small/Mid Cap Growth outperformed in Q4 2025 but significantly lagged for the year. Healthcare led by Exact Sciences acquisition and semiconductor strength drove quarterly gains. The team made strategic position changes while acknowledging recent underperformance. Management remains committed to high-quality growth philosophy and sees improving portfolio response when fundamentals are rewarded over momentum factors. |
| Nov 8 2025 | 2025 Q3 | AAON, ADMA, AFRM, ALAB, BMI, BOOT, BRBR, BROS, BURL, BWXT, CASY, CAVA, CLWD, COCO, DKNG, ELF, EXAS, FDS, FOUR, FSS, HLI, INSM, INSP, IONQ, LII, MASI, MKTX, MTSI, NBIX, PEN, PODD, QBTS, RGTI, SOFI, TARS, TTAN, TWLO, TXRH, WAY, WING, WSO | AI, growth, healthcare, momentum, Quality, semiconductors, small cap, software | - | Baird Small/Mid Cap Growth suffered its worst relative performance since inception, declining 3.2% versus benchmark's 10.7% gain as AI enthusiasm and momentum factors overwhelmed their quality-focused approach. Multiple headwinds including earnings disappointments, consumer weakness, and extreme valuations in quantum computing stocks drove underperformance. Management remains confident in their fundamentals-based philosophy despite acknowledging potential factor exposure adjustments. |
| Aug 4 2025 | 2025 Q2 | ADMA, ALAB, ALHC, BJ, BMI, BOOT, BRBR, BWXT, CASY, CAVA, CHDN, COCO, CWAN, DKNG, DSGX, ELF, EQH, EXLS, FDS, FND, FOUR, FSS, GLOB, HLI, HQY, INSM, INSP, KAI, KNSL, LII, MANH, MKTX, MNDY, MTSI, NBIX, ONTO, PODD, PSTG, SPSC, SRPT, SSD, TARS, TECH, TREX, ULS, VERX, WAY, WSC, WSO, XPEL | AI, Biotech, growth, healthcare, semiconductors, small cap, technology, underperformance | - | Baird's small/mid cap growth strategy underperformed in Q2 as speculative momentum stocks drove benchmark returns. The team maintained discipline, avoiding unprofitable companies while adding quality names like Insmed, CAVA Group, and e.l.f. Beauty. Despite near-term headwinds from elevated valuations and geopolitical risks, the portfolio is positioned for long-term outperformance through selective exposure to sustainable growth companies. |
| Mar 31 2025 | 2025 Q1 | BJ, BOOT, BRBR, BROS, DKNG, EXL, GKOS, ITCI, JNJ, KAI, MASI, PEN, PLNT, PODD, POOL, PRCT, RGEN, TECH, ULS, WSO | AI, consumer, growth, healthcare, industrials, small cap, technology, volatility | - | Baird's small/mid cap growth strategy slightly outperformed in a challenging Q1, declining 10.6% versus benchmark's 10.8% drop. AI spending concerns and tariff uncertainty drove market volatility. Portfolio benefited from consumer holdings like BJ's Wholesale Club and healthcare M&A activity, while reducing cyclical tech exposure. Manager maintains focus on quality businesses to navigate market fragility. |
| Jan 20 2025 | 2024 Q4 | ACLS, ALAB, APPF, CACI, CHX, CYBR, GKOS, LW, MASI, MEDP, MNDY, NBIX, ONTO, PEN, PODD, PSTG, RXST, SITM, TARS, VERX, VITA | AI, growth, healthcare, Outperformance, semiconductors, small caps, technology | - | Baird Small/Mid Cap Growth outperformed in Q4 with strong healthcare and technology stock selection, led by Tarsus Pharmaceuticals product launch success and Astera Labs AI infrastructure surge. Despite full-year underperformance, the fund maintains conviction in its balanced approach versus concentrated benchmarks, actively rotating positions while facing ongoing challenges from benchmark concentration and interest rate sensitivity. |
| Oct 30 2024 | 2024 Q3 | AAON, ACLS, ALAB, APPF, BMI, BOOT, BROS, BSY, BURL, BWXT, CACI, CASY, CWA, CYBR, EXLS, FANG, FDS, FIVE, FND, FOUR, IEX, INSP, IRTC, JKHY, KAI, KNSL, LFUS, LGIH, LSCC, LW, MANH, MEDP, MNDY, NBIX, ONTO, PCOR, PODD, POOL, PRCT, RXST, SITM, SMPL, TARS, TREX, TYL, ULS, VNOM, WSC | financials, growth, healthcare, industrials, semiconductors, small caps, software, technology | - | Baird Small/Mid Cap Growth matched benchmark returns in Q3 with strong technology performance led by AI and cybersecurity additions. The fund made significant portfolio changes while maintaining disciplined SMID focus, exiting Tyler Technologies due to size constraints. After a challenging eight-month period, the manager remains committed to their investment philosophy and encouraged by Q3's improved relative performance. |
| Jun 30 2024 | 2024 Q2 | AAON, APPF, BAH, CACI, CNMD, DECK, FIVE, FND, FSS, GKOS, HEI, INSP, ITCI, JNJ, LGIH, LII, MANH, MEDP, NBIX, PODD, POOL, PRCT, RBC, RGEN, RXST, SPSC, SSD, TARS, TREX, TXRH, VERX, XPEL, ZBRA | AI, Defense Spending, growth, healthcare, small caps, software, technology | - | Baird Small/Mid Cap Growth underperformed in Q2 as market concentration in large-cap tech continued pressuring smaller stocks. The team actively repositioned the portfolio, adding defense contractor CACI, software names, and healthcare innovators while exiting underperformers. Despite near-term headwinds from narrow market leadership, management expects mean reversion to eventually favor their high-quality growth approach. |
| Mar 31 2024 | 2024 Q1 | BOOT, BROS, BSY, BWXT, CELH, CHDN, CNMD, CWAN, DAVA, DECK, DT, EXAS, FIVE, FOUR, GLBE, GLOB, GXO, HALO, ICLR, INSP, KAI, KNSL, KNX, LFUS, LGIH, LSCC, LW, MNDY, MSTR, MTDR, ONTO, PCOR, PEN, PODD, QDEL, RGEN, SAM, SITM, SMCI, SMPL, SWAV, TARS, TECH, TREX, VITA, WNS, WSO, XPEL | AI, growth, healthcare, Performance, semiconductors, small cap, technology | - | Baird Small/Mid Cap Growth returned 2.1% in Q1 but lagged the benchmark's 8.5% gain due to limited AI exposure and momentum headwinds. Technology underperformed despite adding three new positions, while healthcare showed mixed results highlighted by Shockwave Medical's 70% gain from acquisition. Management maintains disciplined approach despite recent underperformance. |
| Dec 31 2023 | 2023 Q4 | BJ, BOOT, BSY, BWXT, COCO, CWAN, DAVA, DECK, DSGX, DT, EXLS, FIVE, FND, FOUR, GLOB, GNRC, GTLS, HALO, IEX, INSP, KAI, KNSL, LGIH, LSCC, LW, MTZ, NEO, NSA, PCTY, PODD, POOL, PTC, PWSC, RBC, RVNC, SAM, SWAV, TREX, TTC, TYL, WNS, WSO | financials, growth, healthcare, industrials, rates, small cap, technology | - | Baird Small/Mid Cap Growth underperformed in Q4 as speculative small caps rallied on rate cut expectations. The quality-focused strategy faced headwinds from market preference for highly-levered, lower-margin companies. Portfolio adjustments included exits from conviction-lacking positions and new investments in analytics and educational software. Management maintains focus on profitable, well-managed businesses across economic scenarios. |
| Sep 30 2023 | 2023 Q3 | BJ, CHDN, CHPX, CNMD, CWAN, FIVE, FND, FOUR, INSP, KNSL, LFUS, LGIH, MTDR, MTZ, PODD, RBC, SAM, SWAV, TTC, WSC | consumer, growth, healthcare, industrials, inflation, rates, small caps, technology | - | Baird's small/mid-cap growth strategy underperformed in Q3 as GLP-1 drug developments hammered medical device holdings and rising rates pressured consumer names. The team added to oversold healthcare positions while reducing exposure to companies with weakening fundamentals. Energy and select financials provided bright spots amid challenging market conditions for growth stocks. |
| Jun 30 2023 | 2023 Q2 | CHDN, CNMD, COCO, CTLT, CWAN, DECK, EXAS, ICLR, INSP, IRTC, KNSL, LGIH, MKTX, PODD, POOL, RGEN, RVNC, SEDG, SWAV, TECH | consumer discretionary, financials, growth, healthcare, industrials, small caps, technology | - | Baird's small/mid-cap growth strategy underperformed in Q2 as their bias toward profitable, higher-multiple stocks faced headwinds. Consumer discretionary led by Deckers performed well, while technology lagged despite AI enthusiasm. Healthcare showed mixed results with device companies benefiting from surgical volume recovery but biotech facing spending constraints. Management maintains focus on quality companies with strong competitive advantages. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI remained the dominant investment theme in Q2 2026, with hyperscale cloud providers continuing to increase capital spending on data centers, networking, and infrastructure. The AI-led rally drove historic semiconductor gains, with 24 benchmark constituents up over 100% in the quarter, half of them semiconductor or AI-infrastructure companies. The manager believes AI has potential to create substantial long-term value across many industries but notes that rapidly rising expectations and increasingly concentrated market leadership suggest risk is building in certain areas. |
Data Centers Semiconductors Cloud Infrastructure Spending |
SemiconductorsSemiconductors experienced a historic rally in Q2 2026, with the manager's three semiconductor positions all up over 50% but unable to keep pace with the benchmark where 24 constituents rose over 100%. The manager believes there could be a reversal in returns in both semis and software but acknowledges timing remains difficult to predict. The sector's performance was driven by AI-infrastructure spending. |
AI Data Centers Technology | |
SoftwareSoftware continued to trade lower during Q2 2026 while AI-infrastructure stocks rallied. The manager added exposure to software with a new position in Agilysys, a high-quality cloud software company with durable recurring revenue, high switching costs, and significant margin expansion potential. The manager believes there could be a reversal in returns favoring software but timing remains difficult to predict. |
Cloud SaaS Enterprise Software | |
Data CentersData center-related investments were a major driver of Q2 2026 performance, with the manager adding positions in AAON and Modine to gain exposure to highly engineered cooling systems. The manager believes the market is underestimating the duration and magnitude of demand for sophisticated thermal management as hyperscalers build AI data centers. Generac was also added to benefit from long-term demand for resilient power infrastructure driven by AI data centers and chip fabs. |
AI HVAC Power Equipment Infrastructure Spending | |
Consumer DiscretionaryConsumer discretionary was a positive relative contributor in Q2 2026, with strong performance from apparel and footwear companies including Victoria's Secret, Crocs, and Kontoor Brands. The manager re-established a position in Ollie's Bargain Outlet and initiated Crocs, seeing attractive opportunities with improving revenue growth and meaningful share repurchases. The manager exited Wingstop and BJ's Wholesale Club due to weakened investment theses and competitive concerns. |
Apparel Footwear Discount Retail Restaurants | |
BiotechnologyThe manager made several trades to reposition healthcare exposure, adding three commercial-stage therapeutics companies with promising growth potential. Ascendis Pharma has a proprietary drug platform for rare endocrine diseases, Axsome Therapeutics has a recently approved therapy for agitation due to dementia/Alzheimer's, and Alkermes has a lead product in the Orexin receptor category. Two of these companies are already profitable with the third potentially profitable early next year. |
Pharmaceuticals Rare Diseases CNS Specialty Pharma | |
SpaceThe manager purchased MDA Space, believing it is positioned to benefit from a structural expansion in the space economy. Dramatically lower launch costs driven by SpaceX's reusable rockets are unlocking new commercial opportunities while governments accelerate spending on missile and ship tracking, space object tracking, and secure communication. The company recently listed in the U.S. and is in early stages of investor discovery. |
Defense Satellites Aerospace | |
| 2026 Q1 |
AIPortfolio positioned to benefit from AI infrastructure demand through semiconductor and contract manufacturing holdings. Added positions in Lattice Semiconductor, Rambus, Astera Labs, Jabil, and Fabrinet due to outsized demand from datacenter construction and AI infrastructure. Multiple holdings continue to see massive demand from data center construction. |
Data Centers Semiconductors Infrastructure Contract Manufacturing Demand |
DefenseStrong performance from aerospace and defense holdings including Woodward, Curtiss-Wright, BWX Technologies, and new position Kratos Defense. Woodward positioned to benefit from structural aerospace and defense tailwinds with significant aftermarket and defense exposure. Added Kratos for advanced drone systems and national security products. |
Aerospace Defense Spending Tailwinds Aftermarket Drones | |
SemiconductorsBroadened semiconductor holdings to include Lattice Semiconductor, Rambus, and Astera Labs after exiting software positions. Technology sector outperformed with portfolio holdings down roughly 5% compared to negative 14% for benchmark. Decision to add semiconductor exposure proved beneficial to performance. |
Semiconductor Cycle Technology Outperformance Exposure Beneficial | |
Data CentersMultiple holdings benefiting from massive demand from data center construction including Jabil, Fabrinet, Comfort Systems USA, Hubbell, and Littlefuse. Littlefuse positioned at center of rising power density with data center wins set to 2-4x over next several years. World needs far more electrical equipment as we consume and move more electricity behind data centers. |
Construction Power Density Electrical Equipment Infrastructure Growth | |
HealthcareChallenging sector on both relative and absolute basis. Benefited from acquisitions of Penumbra by Boston Scientific and Masimo by Danaher. Added five new healthcare ideas including former holdings Dexcom and Illumina, plus Align Technologies, Transmedics Group, and Twist Biosciences. Continued growth prospects despite market worries. |
Biotechnology Medical Devices M&A Growth Prospects Challenging | |
| 2025 Q4 |
Healthcare ITCareCloud helps smaller U.S. health practices manage data and collect payments. High switching costs lock in practices but also lock out competitors. Most RCMs have high fixed costs and too few clients, creating consolidation opportunities for CareCloud to buy cheaply and cut costs. |
EHR RCM Healthcare Consolidation Switching Costs |
CementICG owns cement plants in Kazakhstan and Tajikistan with significant energy and transport cost advantages. Newest dry process plants with heat recovery versus competitors' older wet process plants. Geographic proximity to customers reduces transport costs substantially. |
Energy Efficiency Transport Kazakhstan Cost Advantage Infrastructure | |
ConstructionCTR Holdings builds structural frames and handles finishing work in Singapore. Most projects are public with stable government payments guaranteeing cash flow. Company had significant net cash and signed project backlog. |
Singapore Government Cash Flow Backlog Public Projects | |
| 2025 Q3 |
AIAI enthusiasm drove significant benchmark outperformance through semiconductor and infrastructure plays, with quantum computing stocks adding over 2% to benchmark weight despite extreme valuations. The market's insatiable desire for AI beneficiaries created meaningful factor headwinds for the portfolio. |
Semiconductors Infrastructure Quantum Data Centers Computing |
QualityThe portfolio's focus on high-quality companies with strong fundamentals was punished as factors representing quality (long-term earnings growth, ROE, ROIC) generated negative returns. Quality metrics underperformed beta and momentum factors significantly. |
Fundamentals ROE ROIC Earnings Balance Sheets | |
MomentumMomentum factor exposure drove strong benchmark returns since April, creating headwinds for the portfolio's bottom-up approach. The strategy added momentum exposure through new positions in Affirm Holdings and SoFi Technologies. |
Factor Beta Volatility Story Stocks Narrative | |
| 2025 Q2 |
AIThe benchmark's rally was led by companies with AI-exposure that drove rapid multiple expansion. The portfolio underperformed due to underexposure to more speculative AI areas including small cap semiconductors and AI-hardware. Defensive positions with minimal AI-exposure were the largest detractors to relative performance. |
Semiconductors Hardware Technology Speculation Multiple Expansion |
BiotechnologyBiotech continues to be a significant weight in the Russell 2500 Growth index. The team believes commercial stage companies with marketed products have strong growth prospects. They added several new biotech positions including Insmed, which reported early clinical data much stronger than expected. |
Clinical Trials Commercial Stage Drug Development M&A Growth Prospects | |
SemiconductorsThe portfolio was underexposed to small cap semiconductors during the quarter's rally. They added to semiconductor exposure by purchasing Astera Labs and MACOM Technology Solutions. MACOM Technology Solutions was mentioned as generating nice gains during the quarter. |
Small Cap Technology Hardware Exposure Rally | |
| 2025 Q1 |
AIAI-related spending faced questions regarding untethered pace as DeepSeek emerged as a potentially cheaper alternative platform from China. Microsoft's datacenter appetite showed signs of moderation, slowing positive market sentiment. Portfolio holdings with AI data center spending exposure experienced volatility. |
Data Centers Cloud Semiconductors Technology Spending |
Trade PolicyPresident's commitment to enact meaningful global tariffs created policy uncertainty and provided catalyst for sharp negative market reversal. Boot Barn sold off due to worries over future tariff exposure despite solid quarterly results. Uncertainty surrounding draconian tariff levels impacted consumer confidence. |
Tariffs Policy Consumer Uncertainty Global | |
Consumer FinanceDraftKings positioned as digital sports entertainment company in two-player online sports betting market. Company expected to inflect to material earnings growth as promotional and customer acquisition costs decline behind favorable competitive dynamics. |
Sports Betting Gaming Digital Competition Growth | |
FitnessPlanet Fitness is largest franchisor and operator of high value, low price gyms in US. Under new management, company raising membership pricing and leaning into better marketing and enhanced club layout to improve franchisee sentiment and drive revenue growth. |
Gyms Franchising Pricing Management Revenue | |
Biopharma M&AIntra-cellular Therapies was acquired by Johnson & Johnson early in the year at roughly 50% premium. While biotech companies often lack stability from strong balance sheet and positive free cash flow, manager continues seeking commercial stage businesses with strong top-line growth. |
Biotech Acquisition Premium Commercial Growth | |
NuclearBWX Technologies is unique provider of nuclear power solutions that experienced volatility from conflicting headlines about potential budget changes to military programs for nuclear submarines and ships. AI enthusiasm pulled company into alternative energy narrative with microreactors capabilities. |
Nuclear Power Military Submarines Microreactors Energy | |
| 2024 Q4 |
AIThe fund holds Astera Labs, a fast-growing semiconductor company with exposure to AI and data center infrastructure. The company's stock increased over 150% in the quarter following new product announcements and stronger than expected sales growth. Pure Storage was initiated as a new position, expected to benefit from hyperscaler AI spending with recent design wins. |
Data Centers Semiconductors Hyperscaler Infrastructure Growth |
BiotechnologyHealthcare was the strongest performing sector with positive fundamentals across holdings. Tarsus Pharmaceuticals continued its lead product launch, Neurocrine Biosciences received pipeline drug approval, and the fund initiated a position in Masimo as a cleaner pure-play healthcare company with consistent growth prospects. |
Pharmaceuticals Product Launch Pipeline Healthcare Growth | |
Small CapsThe fund focuses on small and medium-sized growth companies in the Russell 2500 Growth Index. Small- and SMID-cap growth benchmarks trailed the S&P 500 and Nasdaq during the quarter, with benchmark concentration in AI-related stocks presenting ongoing challenges for the investment style. |
SMID Cap Growth Benchmark Concentration Outperformance | |
| 2024 Q3 |
AIThe fund initiated a position in Astera Labs, a fast-growing and profitable developer of semiconductor products known as retimers that are key enablers of AI workloads and help prevent GPU bottlenecks. The manager believes this business adds further profitable AI-exposure to the portfolio. |
Semiconductors GPU Infrastructure Data Centers Computing |
CybersecurityThe fund initiated a position in CyberArk Software, which has the leading market position in cybersecurity software known as Privileged Access Management. The manager believes this should deliver solid revenue growth along with profit margin expansion. |
Software Enterprise Security Identity Access Management SaaS | |
Data CentersAAON was a strong contributor in the quarter due to data center exposure. The company benefits from the growing demand for data center infrastructure and cooling solutions. |
HVAC Cooling Infrastructure Cloud Computing | |
NuclearBWX Technologies benefited from favorable nuclear industry trends during the quarter. The company is positioned to benefit from the growing interest in nuclear power as part of the energy transition. |
Energy Power Generation Clean Energy Infrastructure Defense | |
WaterThe fund initiated a position in Badger Meter, which provides a comprehensive suite of digital water offerings that allows their customers to improve operating efficiency, resiliency, and sustainability. This small cap company has a track record of consistent, secular revenue growth and margin expansion. |
Infrastructure IoT Sustainability Utilities Efficiency | |
| 2024 Q2 |
AIArtificial intelligence continues to drive outperformance in technology-related businesses. The portfolio benefits from AI tailwinds through utilities and telecommunications sectors. AAON's recent BASX Solutions acquisition provides exposure to datacenter infrastructure builds driven by AI needs. |
Datacenter Infrastructure Technology HVAC Commercial |
HealthcareHealthcare sector experienced volatility with mixed results across holdings. Positive developments included new product cycles at Glaukos and key catalysts at Insulet. However, concerns over GLP-1 therapeutics impact on device therapies affected Inspire Medical performance. |
Medical Devices Biotechnology GLP1 Therapeutics Innovation | |
Defense SpendingStrong demand environment for government IT services driven by increased U.S. defense spending. CACI benefits from this trend with multiple large project ramps expected to drive higher organic revenue growth in the defense contractor space. |
Government IT Defense Contractors Projects Growth | |
SoftwareSoftware holdings drove positive technology sector performance with both long-time holdings and newer positions contributing. The portfolio added multiple software companies including SPS Commerce for EDI solutions and AppFolio for real estate management solutions. |
SaaS Enterprise Software Cloud Technology Growth | |
| 2024 Q1 |
AIAI spending expectations drove significant outperformance in technology stocks, particularly benefiting companies like Super Micro Computer which investors view as the next Nvidia. The fund has limited direct AI exposure through Lattice Semiconductor and has not reached comfort levels on sustainable AI impact for many benchmark holdings. AI headwinds affected both technology and industrial sectors as datacenter and semiconductor manufacturing equipment companies saw outsized gains. |
Artificial Intelligence Data Centers Semiconductors Technology Spending |
SemiconductorsThe fund added Onto Innovation, a semiconductor capital equipment business with expertise in advanced packaging, believing this could prove more secular than cyclical as semiconductor size and complexity increases. Lattice Semiconductor provides the fund's primary semiconductor exposure. The sector benefited from AI-related spending expectations during the quarter. |
Chip Equipment Advanced Packaging Capital Equipment Technology | |
HealthcareMixed performance across healthcare holdings with Shockwave Medical delivering over 70% returns following its Johnson & Johnson acquisition. New addition Tarsus Pharmaceuticals showed strong physician reception for its novel eyelid infection treatment. The fund continues to favor companies with strong new product cycles like Penumbra, Inspire Medical, and Insulet, while exiting positions in QuidelOrtho, Exact Sciences, and Halozyme due to execution concerns and competitive risks. |
Medical Devices Pharmaceuticals M&A Innovation Competition | |
| 2023 Q4 |
RatesLower-than-expected inflation report in late October led markets to declare an end to Fed tightening and begin discounting multiple rate cuts in 2024. Interest-rate-sensitive stocks rallied sharply late in the quarter, benefiting housing-related and financial stocks. The changed outlook on rates drove significant market movements throughout the quarter. |
Interest Rates Fed Policy Rate Cuts Inflation Monetary Policy |
Small CapsSmall, speculative, unprofitable stocks rallied sharply in December, particularly biotech where the fund is underweight. The portfolio lagged in December as factors were broadly negative for their style of management, with more highly-levered, lower-margin, and lower-earnings growth companies outperforming. |
Small Cap Speculation Biotech Leverage Growth | |
| 2023 Q3 |
GLP1GLP-1 drugs emerged as a solution for obesity and reducing long-term cardiovascular risks, leading to sharp negative reactions across the medical equipment industry. The market views it as a zero-sum game with inevitable shrinkage of addressable markets for diabetes and sleep apnea devices. |
Obesity Diabetes Medical Devices Cardiovascular Sleep Apnea |
RatesRising interest rates throughout the quarter impacted various sectors, particularly housing-related holdings and homebuilders. The notable run-up in rates reflected above-trend inflation and healthy labor market conditions. |
Interest Rates Mortgage Rates Housing Inflation Fed Policy | |
InflationInflation has receded sharply from its peak but not yet to the Fed's desired level. The cumulative impact of inflation and interest rate increases has taken a toll across sectors, particularly affecting smaller companies differently than large-cap stocks. |
Price Increases Fed Target Economic Impact Small Caps Pricing Power | |
| 2023 Q2 |
HealthcareHealthcare sector showed mixed performance with surgical volumes returning to normal seasonal patterns, benefiting medical technology holdings like Shockwave and Inspire. However, constrained biotech spending hurt companies like Catalent, which faced operational issues and CFO termination. |
Medical Devices Biotechnology Surgical Bioprocessing Diagnostics |
TechnologyTechnology sector was the largest relative detractor despite strong benchmark returns over 10%. AI focus drove appreciation in many tech stocks, but the portfolio experienced setbacks in companies like Sprout Social and Endava due to recession concerns and reduced technology spending. |
AI Enterprise Software Semiconductors IT Services SaaS | |
Consumer DiscretionaryBest performing sector led by Deckers with strong HOKA brand growth, LGI Homes and Pool Corp benefiting from housing demand despite higher mortgage rates. Initiated position in Churchill Downs based on superior management and capital allocation track record. |
Footwear Homebuilders Casinos Consumer Electronics Housing | |
IndustrialsSector was a relative detractor despite solid gains in several stocks as recession fears never materialized. Companies like Trex, MasTec, and GXO Logistics showed improving fundamentals, while Chart Industries benefited from acquisition-driven growth potential. |
Industrial Machinery Construction Logistics Industrial Services Automation |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| VSCO | Discretionary performance was due to several stocks with exposure to apparel and footwear, such as Victoria's Secret, Crocs, and Kontoor Brands. |
| CROX | Discretionary performance was due to several stocks with exposure to apparel and footwear, such as Victoria's Secret, Crocs, and Kontoor Brands. We also initiated a position in Crocs as we see an attractive opportunity, with improving revenue growth prospects and meaningful share repurchases supporting double-digit earnings growth over the next several years. |
| KTB | Discretionary performance was due to several stocks with exposure to apparel and footwear, such as Victoria's Secret, Crocs, and Kontoor Brands. |
| OLLI | We re-established a position in Ollie's Bargain Outlet, where new merchandising leadership and a more favorable competitive backdrop following recent retail bankruptcies should support stronger operating performance. |
| WING | We exited Wingstop after concluding our investment thesis had weakened. |
| BJ | We also sold BJ's Wholesale Club amid rising competitive concerns from Walmart, Amazon, and emerging agentic commerce initiatives. |
| COCO | Strong performance in consumer staples was mostly due to strong quarterly results from Vita Coco, which was up nearly 40% in the quarter. Given the strong stock returns year-to-date we reduced our position size. |
| CASY | Long-time holding Casy's General Stores also contributed positively in the quarter. |
| TWLO | We benefitted from owning Twilio (+64%) but that was offset from lackluster quarterly returns from ServiceTitan, Fabinet, and long-time holding Descartes Systems Group. |
| DSGX | We benefitted from owning Twilio (+64%) but that was offset from lackluster quarterly returns from ServiceTitan, Fabinet, and long-time holding Descartes Systems Group. |
| AGYS | In fact, we decided to add to software with a position in Agilysys, a high-quality business with durable recurring revenue, high switching costs, and significant margin expansion potential. It is a cloud software company that provides mission-critical software for hotels, resorts, casinos, cruise lines, and other hospitality operators, including property management, guest reservations, point-of-sale, and guest engagement solutions. The company is differentiated by its integrated, cloud-native platform that spans multiple operational workflows, allowing customers to consolidate vendors, while leveraging AI to automate workflows and improve the guest experience. |
| AFRM | Portfolio performance was led by Affirm, a high growth payments technology company that benefitted from continued strong execution despite market worries of weakening consumer credit conditions. |
| KNX | We also saw positive relative contributions from Knight-Swift Transportation and Littelfuse. |
| LFUS | We also saw positive relative contributions from Knight-Swift Transportation and Littelfuse. |
| CSD | Positions sold due to large size included Comfort Systems and EMCOR Group. |
| EME | Positions sold due to large size included Comfort Systems and EMCOR Group. |
| 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 | |||
