| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 11.8% | -4.6% | 5.0% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 5.0% | 15.1% | 23.2% | -28.0% | 6.5% | 33.0% |
Brown Advisory's Mid-Cap Growth strategy underperformed the Russell Midcap Growth Index in Q4 2025 due to stock selection, but delivered full-year performance in line with expectations. The strategy's underperformance was primarily driven by not owning Palantir Technologies, which contributed 430 basis points to the benchmark's return despite trading at extreme valuations. The strategy focuses on high-quality compounders with market caps between $2-50 billion, holding winners as they grow to over $100 billion in value. During the quarter, the team added several new positions including Amer Sports, Axon Enterprise, and Zscaler, taking advantage of market volatility to deploy capital into attractive opportunities. Key themes driving performance include AI-enabled solutions, data center infrastructure demand, and nuclear power appreciation. The strategy benefits from broadening market leadership beyond large-cap technology and expects small-cap earnings acceleration in 2026 to support mid-cap outperformance. Dollar turnover remained elevated as the team maintained discipline around price targets while capitalizing on volatility.
The Mid-Cap Growth strategy aims to generate solid risk-adjusted returns by owning high-quality compounders with fair valuations and market caps between $2 billion and $50 billion at the time of purchase, often holding winners for years as they compound to just above $100 billion in company value.
The strategy remains committed to achieving attractive, risk-adjusted returns over a full market cycle by owning a diversified portfolio of companies that can grow significantly larger over time. The manager expects the broadening of market drivers beyond large-cap tech to continue benefiting small- and mid-caps, with small-cap earnings growth expected to accelerate in 2026.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 26 2026 | 2025 Q4 | AS, AXON, CPNG, CSGP, CVNA, EFX, EXPE, FICO, HWM, INSM, IOT, MDLN, NTRA, PLTR, PSN, PSTG, RKLB, ULTA, VEEV, ZS | AI, energy, growth, healthcare, industrials, mid cap, semiconductors, technology | - | Several portfolio companies are generating meaningful revenue from GenAI-enabled products, with Axon leading through DraftOne and related offerings that drove over $500 million in bookings.… |
| Oct 16 2025 | 2025 Q3 | ALNY, CAH, CMG, CVNA, DKNG, DXCM, FIG, FIX, MDB, NTSK, OS, PSN, RBLX, TTD, VRSK, WST, ZS | Artificial Intelligence, Biotechnology, cybersecurity, Data centers, healthcare |
PSN NTSK CVNA |
Brown Advisory sees strong tailwinds from AI and data center infrastructure fueling select mid-cap growth opportunities, including semiconductors, software, and cybersecurity. The fund also focuses… |
| Aug 27 2025 | 2025 Q2 | ENTG, GWRE, MRVL, NET, PINS, RBLX, TECH, VOYG, VST | AI Infrastructure, fundamentals, Mid Cap Growth, secular growth, valuation | - | The letter focuses on mid-cap growth companies benefiting from secular trends such as AI infrastructure, data centers, and industrial services. Volatility created by tariffs and… |
| 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 |
CybersecurityCybersecurity companies are using AI in core algorithms to better identify anomalies and block malicious traffic. CrowdStrike is seeing reacceleration in growth with new Falcon Flex offering, while Netskope continues gaining SASE market share with strong competitive win rates. |
Security AI Detection Enterprise Cloud Protection | |
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 | |
EnergyEnergy plays a critical role in AI infrastructure economics, with data centers becoming major electricity consumers. Rising power costs compress margins while grid constraints and regulatory scrutiny influence deployment timelines. The manager emphasizes that unlike software-driven growth, AI compute cannot be scaled independently of physical energy reality. |
Data Centers Grid Power Infrastructure Utilities | |
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 |
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 | |
| 2025 Q2 |
Growth |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 16, 2025 | Fund Letters | GEORGE SAKELLARIS | PSN | Parsons Corp. | Information Technology | Aerospace & Defense | Bull | NYSE | Contracts, cybersecurity, Defense, Government, growth, infrastructure | Login |
| Oct 16, 2025 | Fund Letters | GEORGE SAKELLARIS | NTSK | NetSkope Inc. | Information Technology | Cybersecurity | Bull | - | AI, cloud, cybersecurity, growth, IPO, Software, technology | Login |
| Oct 16, 2025 | Fund Letters | GEORGE SAKELLARIS | CVNA | Carvana Co. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | Autos, Digital, e-commerce, growth, Margins, retail, Scalability | Login |
| TICKER | COMMENTARY |
|---|---|
| AS | Amer Sports (AS) – the company behind the Arc'teryx, Salomon, and Wilson brands – is gaining share across outdoor categories as double-digit revenue growth, combined with margin expansion, sets the stage for multi-year earnings growth. We initiated the position after it became clear the company had moved past a prior marketing misstep in China and that all three core brands were delivering robust growth despite a challenging macro backdrop. |
| AXON | Axon Enterprise Inc. develops and produces Taser weapons and body cameras for law enforcement agencies. Investors have grown accustomed to big beats and raises from Axon. A slight beat to third-quarter projections and mixed fourth-quarter guidance triggered a -21% decline. We added to the position due to solid customer growth and retention. There are also numerous growth drivers for their business including Taser 10, bodycam 4, and their artificial intelligence software bundle. |
| CPNG | Shares of Coupang, Inc., Korea's largest e-commerce platform, declined 26.7% in the fourth quarter (though up 7.3% in 2025). The weakness was initially driven by elevated upfront investments in its new market, Taiwan, where aggressive customer acquisition, supplier onboarding and product procurement, and logistics infrastructure buildout weighed on near-term profitability. |
| CSGP | The shares of CoStar Group, Inc., the global leader in digitizing real estate, declined in the fourth quarter, due to concerns that the company's residential Homes.com platform will continue to require significant capital investment and competitive worries that Google's new real estate advertisement format and Zillow's OpenAI partnership could divert traffic from Homes.com in the years ahead. |
| CVNA | Our portfolio looks very skewed to Carvana, but that is a feature of the strategy – to let winners run. We did not buy Carvana at this size; it is this size because it is up 100x from its 2022 lows. Carvana uses its technology to manage pricing, logistics, inspections, reconditioning workflow, merchandising, and more. These are all cogs in the industrial machine it has assembled to buy and sell cars to end customers. Significant proprietary technology has been developed to enable Carvana's retail and wholesale operations. Because Carvana is digitally native and has significant size and scale, it has been able to invest in significantly more technology than other auto dealers. |
| EFX | We divested our position in Equifax during the quarter following a strategic shift by FICO, a leading provider of credit scores to the mortgage industry. FICO announced plans to sell its credit scores directly to mortgage underwriters, bypassing the credit bureaus and thereby pressuring the economics that EFX has historically captured in the credit-scoring value chain. |
| EXPE | Expedia, which was a recent purchase, also posted strong results and raised the outlook going forward. We added to our exposure to Expedia and continue to hold both stocks in the Fund. |
| FICO | Fair Isaac Corporation (FICO), a data and analytics company focused on predicting consumer behavior, contributed to performance. FICO reported strong quarterly financial results and solid fiscal 2026 guidance, which calls for 28% EPS growth. The company also launched its new Direct Licensing Program for mortgage lending, which provides greater flexibility to monetize its intellectual property. |
| HWM | RTX and Howmet extended gains as commercial aerospace demand remained strong and defense spending stayed elevated amid ongoing geopolitical uncertainty, supporting backlog strength and long-cycle earnings durability |
| INSM | Insmed Inc., a biopharmaceutical company focused on developing and commercializing therapies for patients with rare diseases, advanced 21% over the quarter. We have been pleased with the launch of Brensocatib, a first-in-class oral medication that treats non-cystic fibrosis bronchiectasis. The reception has been positive from physicians, patients, and payers. |
| IOT | Samsara Inc. 1.5 (4.55) (0.01) |
| NTRA | Not owning Natera, Inc. (NTRA) detracted from performance. The stock rose after its earnings announcement, signaling a strong revenue beat. |
| PLTR | The top three contributors to this outperformance came from Palantir Technologies (US Defense) |
| PSN | Parsons is a technology-driven engineering firm serving the defense, intelligence and infrastructure markets, with strengths in cybersecurity, missile defense and infrastructure protection. Shares fell in Q4 after losing out on winning a $12.5 billion Federal Aviation Administration (FAA) air traffic control modernization contract, interrupting a recovery from earlier cost-cutting pressures tied to the Department of Government Efficiency initiatives. Despite not being selected as the prime integrator, we remain invested, as Parsons' long-standing relationship with the FAA positions it to capture meaningful portions of the program. |
| PSTG | During the fourth quarter, we found several opportunities to lean back into holdings that we trimmed or sold earlier in the year due to valuation, including Pure Storage (PSTG). In fact, the large swings in PSTG's share price illustrate why dollar-based turnover has been elevated. The all-flash storage array maker enjoyed accelerating sales growth the last few quarters as more enterprises and hyperscalers adopted its superior storage solutions. Fundamentals have been in-line or better than our expectations. Nonetheless, despite consistently solid results, PSTG's share price, as shown below, has taken a wild ride. |
| 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. |
| VEEV | Veeva Systems Inc. provides industry cloud solutions to the global life sciences industry. The company delivered solid fiscal third-quarter results and issued guidance above the Street. Veeva management reiterated confidence in achieving its 2030 financial targets, maintaining that the current focus on competitive dynamics with Salesforce.com in the customer relationship management (CRM) market (20% of Veeva's total revenues) does not undermine its long-term trajectory. Despite these positives, the stock sold off by -25% on competitive concerns in the CRM market as Veeva projected lower Vault CRM customer versus its initial expectations. |
| ZS | Zscaler was among the top 5 largest detractors with significant price declines. We wrote a new investment memo on Zscaler during the quarter. |
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