| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 18.0% | 0.0% | 12.6% |
| 2025 | 2024 |
|---|---|
| 12.6% | 21.1% |
Giverny Capital posted solid 12.58% returns in 2025 but underperformed the S&P 500's 17.88% gain due to continued mega-cap tech outperformance. The portfolio maintains 45% allocation to companies below $54 billion market cap versus 12.5% for the index, reflecting a deliberate strategy to own market leaders in niche areas. Top contributors included Alphabet (up 66%), Medpace (up 69%), and Arista Networks (up 18.5%), while exits from CarMax, Fiserv, and Align Technology hurt performance. The manager believes AI infrastructure buildout creates uncertainty around returns on massive investments, comparing it to historical railroad and telecom booms where users benefited more than builders. New positions in HVAC distributor Watsco and water treatment company Hawkins reflect focus on businesses that AI cannot displace but may enhance through efficiency gains. Despite near-term headwinds from tech concentration, the manager remains confident that quality businesses with strong earnings growth and capital returns will outperform over time.
Focus on owning high-quality, market-leading businesses in niche areas that generate strong returns on capital and earnings growth, with particular emphasis on smaller and mid-cap companies that trade at reasonable valuations relative to mega-cap technology stocks.
Manager believes owning a portfolio of high-performing businesses including niche market leaders should prove satisfactory over time as AI won't displace these businesses and they may gain efficiency advantages. Feels it will be easier for leading midcap businesses to double earnings than for mega-caps like Nvidia to double from current massive profit levels.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 27 2026 | 2025 Q4 | ALGN, ANET, CACC, CSU.TO, FERG, FI, GOOGL, HEI, HWKN, IBP, JPM, KGIC, KMX, MA, MEDP, META, SCHW, TSM, TWFG, WSO | AI, HVAC, insurance, Quality, small caps, technology, value |
ANET SCHW KNSL WSO ALGN KMX CACC FISV |
Manager discusses AI's transformative potential while noting uncertainty around returns on massive infrastructure investments. Believes AI won't displace portfolio companies like HVAC distributors and insurance… |
| Oct 6 2025 | 2025 Q3 | CSU CN, KMX, MEDP, TSM | Artificial Intelligence, Founder-led, Medtech, quality growth, semiconductors |
MEDP US NVDA US |
Giverny Capital attributes underperformance to Constellation Softwares CEO transition but remains confident in founder-led, high-quality businesses. The letter highlights Medpace and Taiwan Semiconductor as new… |
| Jul 11 2025 | 2025 Q2 | BLDR, FI, GOOG, HEI, KNSL, MTB, PGR | Balance Sheets, cash flow, long-term, niche leaders, Quality |
KNSL FISV GOOG |
The commentary stresses ownership of high-return, niche market leaders with conservative balance sheets amid elevated macro uncertainty. Management prioritizes businesses with durable competitive advantages, strong… |
| Apr 15 2025 | 2025 Q1 | AAON, ALL, ANET, FIVE, KMX, KNSL, LMN CN, MEDP, PGR, TWFG | - | - | - |
| Jan 24 2025 | 2024 Q4 | AHT LN, ALGN, FERG, FI, IBP, KNSL, MEDP, MTB | - | - | - |
| Oct 21 2024 | 2024 Q3 | BRK/A, FND, MEDP, PGR | - | - | - |
| Jul 16 2024 | 2024 Q2 | ERF FP, FIVE, KMX | - | - | - |
| Apr 27 2024 | 2024 Q1 | - | - | - | - |
| Mar 18 2024 | 2023 Q4 | BRO, CMG, NVO | - | - | - |
| Oct 19 2023 | 2023 Q3 | AHT LN, CIEN, FERG, FI, SCHW, SSNC | - | - | - |
| Jul 13 2023 | 2023 Q2 | AAPL, AMZN, CIEN, GOOG, META, MSFT, PGR | - | - | - |
| Apr 17 2023 | 2023 Q1 | FRC, META, SCHW | - | - | - |
| Jan 23 2023 | 2022 Q4 | COHR, ERF FP, FD, FIVE, FRCB, GOOG, HEI, JPM, KMX, KO, MA, META, PGR, SCHW | - | - | - |
| Oct 14 2022 | 2022 Q3 | BRK/A, CIEN, COHR, ERF FP, FRC, JPM, KMX, META, MKL, MTB, PGR, SCHW | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has become a dominant theme across major equity indices, with Nvidia leading the S&P 500, ASML dominating MSCI EAFE, and TSMC leading emerging markets. The fund benefited from AI-related dynamics, particularly through Samsung's memory products experiencing substantial price increases due to DRAM shortages driven by AI demand. |
Semiconductors Memory DRAM Technology Nvidia |
QualityThe portfolio has shifted toward higher quality businesses with better profitability, lower leverage, and less volatile earnings. Quality stocks underperformed significantly in 2025, creating attractive entry points for value investors. The manager maintains price discipline while seeking quality companies trading at discounts to intrinsic value. |
Quality Profitability Leverage Earnings | |
Small CapsConcentrated portfolio of small-cap companies with limited sell-side coverage and institutional ownership. Invests where most institutional managers cannot or will not participate, allowing for asymmetric return potential. 44% of Russell 2000 stocks have zero Wall Street coverage, creating mispriced opportunities. |
Russell 2000 Limited Coverage Institutional Asymmetric Mispriced | |
| 2025 Q3 |
AIAI has become a dominant theme across major equity indices, with Nvidia leading the S&P 500, ASML dominating MSCI EAFE, and TSMC leading emerging markets. The fund benefited from AI-related dynamics, particularly through Samsung's memory products experiencing substantial price increases due to DRAM shortages driven by AI demand. |
Semiconductors Memory DRAM Technology Nvidia |
QualityThe portfolio has shifted toward higher quality businesses with better profitability, lower leverage, and less volatile earnings. Quality stocks underperformed significantly in 2025, creating attractive entry points for value investors. The manager maintains price discipline while seeking quality companies trading at discounts to intrinsic value. |
Quality Profitability Leverage Earnings | |
SemiconductorsTaiwan Semiconductor represents the dominant manufacturer for leading fabless chip designers including NVIDIA, Apple, and Broadcom. The global arms race to develop artificial general intelligence will support multiple years of robust growth for foundries with leading-edge capabilities. |
Foundries Advanced Process AI Chips Manufacturing Technology Leadership | |
| 2025 Q2 |
QualityThe portfolio has shifted toward higher quality businesses with better profitability, lower leverage, and less volatile earnings. Quality stocks underperformed significantly in 2025, creating attractive entry points for value investors. The manager maintains price discipline while seeking quality companies trading at discounts to intrinsic value. |
Quality Profitability Leverage Earnings |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 27, 2026 | Fund Letters | David M. Poppe | SCHW | Charles Schwab Corp | Financials | Investment Banking & Brokerage | Bull | New York Stock Exchange | assets, Brokerage, earnings growth, scale, wealth management | Login |
| Jan 27, 2026 | Fund Letters | David M. Poppe | KNSL | Kinsale Capital Group Inc | Financials | Property & Casualty Insurance | Bull | New York Stock Exchange | efficiency, Insurance, Margins, technology, underwriting | Login |
| Jan 27, 2026 | Fund Letters | David M. Poppe | WSO | Watsco Inc | Industrials | Industrial Distribution | Bull | New York Stock Exchange | Distribution, Efficiency Standards, HVAC, Margins, Replacement Cycle | Login |
| Jan 27, 2026 | Fund Letters | David M. Poppe | ALGN | Align Technology Inc. | Health Care | Medical Devices | Bull | NASDAQ | clear aligners, Consumer-health, Medical devices, Orthodontics, recovery | Login |
| Jan 27, 2026 | Fund Letters | David M. Poppe | KMX | CarMax Inc. | Consumer Discretionary | Automotive Retail | Bull | New York Stock Exchange | Cyclical, Omni Channel, retail, scale, Used cars | Login |
| Jan 27, 2026 | Fund Letters | David M. Poppe | CACC | Credit Acceptance Corp. | Financials | Consumer Finance | Bull | NASDAQ | Auto finance, Credit cycle, Returns, subprime lending, underwriting | Login |
| Jul 11, 2025 | Fund Letters | David M. Poppe | KNSL | Kinsale Capital Group Inc. | Financials | Insurance - Property & Casualty | Bull | NYSE | Expenses, growth, Insurance, specialty, underwriting | Login |
| Jan 27, 2026 | Fund Letters | David M. Poppe | FISV | Fiserv Inc. | Information Technology | Transaction & Payment Processing Services | Bull | New York Stock Exchange | cashflow, Fintech, Payments, recurring revenue, switching costs | Login |
| Jul 11, 2025 | Fund Letters | David M. Poppe | FISV | Fiserv Inc. | Other | - | Bull | NYSE | Banks, growth, Payments, Terminals, valuation | Login |
| Oct 6, 2025 | Fund Letters | David M. Poppe | MEDP US | Medpace Holdings, Inc. | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | buybacks, Clinical trials, founder-led, growth, healthcare, Margins, Transparency | Login |
| Jul 11, 2025 | Fund Letters | David M. Poppe | GOOG | Alphabet Inc. Class C | Communication Services | Internet Content & Information | Bull | NASDAQ | advertising, AI, cloud, innovation, Search | Login |
| Oct 6, 2025 | Fund Letters | David M. Poppe | NVDA US | NVIDIA Corp. | Information Technology | Semiconductors | Bear | NASDAQ | AI, CapEx, Hype, Margins, Risk, semiconductors, Sustainability, valuation | Login |
| Jan 27, 2026 | Fund Letters | David M. Poppe | ANET | Arista Networks Inc. | Information Technology | Networking Equipment | Bull | New York Stock Exchange | AI, data centers, hyperscalers, Networking, Software | Login |
| TICKER | COMMENTARY |
|---|---|
| ALGN | This past summer, however, the valuation came into range. The change in sentiment is to some extent understandable. The fact is Align's business has stagnated since 2021, when a pandemic-driven surge in demand for clear aligners propelled revenues forward by approximately 60%. We purchased our shares in Align for a low-to-mid-teens multiple of our estimate of forward earnings. |
| ANET | Arista Networks, Inc. was one of the best Technology sector outperformers in the portfolio. It reported strong quarterly financial results during the fourth quarter. |
| 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. |
| FI | Fiserv was a material detractor in the quarter. This is a company that we have discussed extensively over the past few years as we owned it successfully from 2023 until 1Q 2025. However, last quarter was a different story. On the 3Q 2025 earnings call, the new CEO and CFO unwound the former team's guidance for the year. They also explained that the team uncovered aggressive tactics used to boost short-term revenue at the expense of long-term customer relationships and, therefore, earnings. As such, management explained that it would be temporarily backing off of the steady organic revenue compounding, earnings margin expansion, and free cash flow generation that investors had grown accustomed to in order to reinvest in the business and reposition Fiserv for higher quality, long-term growth through entrenched customer relationships. While this news was unexpected, we agree that this course of action is in the best interests of the business based on what we've learned. Despite all of these disruptions, Fiserv still expects to grow revenues throughout its reinvestment period and generate substantial free cash flow, because Fiserv remains a strong business with high recurring revenues and essential offerings across its end markets. We are excited to own Fiserv at these levels, as we believe substantial price compounding will be in order over the coming years. |
| GOOGL | I'm willing to go bankrupt rather than lose this race. Larry Page, co-founder of Google |
| 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. |
| HWKN | Our other purchase was Hawkins Inc. We've been watching Hawkins for some time and visited management in the summer of 2024. For a while, it looked like we'd missed our best chance to buy shares at reasonable prices as they've climbed steadily. A brief price correction in the fall gave us an opportunity and we acted. One reason we were deliberate in our research is that for many years Hawkins was a good-not-great business. It has three distinct business units, all of which involve chemistry. Of the three, the Water Treatment unit is the best. |
| IBP | Installed Building Products installs fiberglass insulation into the walls of new homes and apartment buildings. Given the weak housing market, it grew earnings modestly in 2025, but even that trounced expectations. IBP has exceptional management and has generated good returns for us over the past four years. |
| JPM | JPMorgan (JPM) has identified 42 AI-related stocks in the S&P 500, which today represent 45% of the index's market cap. They estimate that these stocks have accounted for 78% of S&P 500 returns, 66% of earnings growth, and 71% of capital spending growth since ChatGPT launched in November 2022. As it relates to the impact on the U.S. economy, JPM estimates tech sector capital spending contributed 40%-45% of U.S. GDP growth through the first 9 months of the year, up from less than 5% during the same period in 2023. As JPM depicts to the right, tech capex in 2025 dwarfs every major historical U.S. infrastructure project as a percentage of GDP. |
| KGIC | Kinsale is an efficient underwriter of low-cost property and casualty insurance to small and medium-sized clients. It is led by its founder, Mike Kehoe, who has built a disciplined and high-functioning culture. I attended Kinsale's investor day presentation in Richmond recently and left more enthusiastic than when I arrived. One small example of Kinsale's competitive advantage: it has technology in place to assemble data quickly and thus quote most policy submissions faster than rivals. Chief Underwriting Officer Stuart Winston says an underwriter at Kinsale can provide quotes on about 10 policy submissions per day vs two or three for an average insurance company. Even with this superior technology, Kinsale has the lowest expense structure in its peer group. |
| KMX | CarMax is the largest used car retailer in the U.S. and has the third largest vehicle wholesale business in the U.S. alongside a large captive finance business. CarMax has underperformed both our and their own expectations over the past two quarters. We believe that the factors causing the weak results are part-macro, part-competitive, and part-operational. The used car industry is still feeling the effects of COVID. Very depressed used car supply, low but improving new car inventories, higher new and used car prices and higher rates have combined to create a perfect storm that has been a headwind to CarMax and industry-wide volumes. These largely cyclical macro factors along with the resurgence of Carvana have led to a more competitive used car market. Although the market is competitive, we believe that CarMax's customer experience, brand, scale, vertical integration, and omnichannel approach are competitive advantages. These advantages should enable them to remain a leader and to take market share in a highly fragmented market over time. As a reminder approximately 95% of the used car market is made up of players not named CarMax or Carvana. We believe that CarMax can compete and win against the franchise dealers and the smaller independent dealers as they typically have. We also believe that CarMax has all the assets to compete effectively with Carvana. We are encouraged by the operational changes the company is making to increase volumes, lower costs, and expand profitability. We anticipate that these changes, along with a normalizing used car market, will lead to a recovery in earnings. Although results may remain bumpy in the short-term, we believe CarMax is a very good business, with favorable long-term prospects. The company has a deep bench of talent, a solid balance sheet, produces significant free cash flow, and is currently buying back shares at a significant discount to our estimate of intrinsic value. |
| MA | The enduring appeal of card payments is their universality. Consumers trust that Visa and Mastercard will be accepted globally. After more than 20 years of litigation, Visa and Mastercard agreed to yet another settlement that gives merchants greater flexibility |
| MEDP | Medpace was the Fund's largest contributor in H1 FY26, having been among its largest detractors over the prior 12 months. Medpace is a US-listed clinical research organisation focused on small biotechnology companies. After four consecutive quarters of elevated project cancellations, Medpace delivered a strong inflection in fundamentals, reporting very robust net bookings growth in Q2 and Q3 FY25, alongside stronger-than-expected guidance for FY26. |
| META | Meta was cited as a larger position that contributed little despite what I thought was positive operating progress, representing opportunity cost in the portfolio. |
| SCHW | One of the things that works for us is taking ideas we found from other investors – Charles Schwab (SCHW) |
| TSM | TSMC leads the MSCI Emerging Markets Index as the manufacturer in the AI ecosystem. |
| WSO | From a stock selection perspective, our positions in Verisk Analytics, Inc. (VRSK) and Watsco, Inc. (WSO) were the biggest laggards. |
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