| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.3% | 0.7% | 13.6% |
| 2025 |
|---|
| 13.6% |
The Harbor Capital Appreciation Fund returned 0.81% in Q4 2025, underperforming the Russell 1000 Growth Index's 1.12% return. The quarter was marked by volatility around AI infrastructure spending concerns and valuation pressures that left no cushion for earnings misses. Despite these headwinds, the Federal Reserve's easing monetary policy and ongoing AI penetration supported markets. Security selection in Health Care and Utilities contributed positively, while Communication Services and Information Technology detracted from relative performance. Key contributors included Eli Lilly's GLP-1 franchise recovery and Alphabet's AI leadership gains, while Netflix and Meta faced headwinds from acquisition concerns and infrastructure spending respectively. The fund initiated positions in Amphenol and Merck while exiting Nike and LPL Financial. Looking ahead to 2026, the manager expects continued unpredictability from policy changes including potential tariff rulings, Fed leadership changes, and NAFTA renegotiation. The fund maintains its disciplined approach focused on high-quality companies with enduring competitive advantages and long-term growth potential.
The fund invests in high-quality U.S. large-cap companies with strong balance sheets, earnings performance, sales momentum, and unique market positions, staying fully invested while focusing on long-term growth rather than market timing.
2025 was a year that seemed to be more unpredictable than many in recent memory, especially from a U.S. policy and political standpoint. With the anticipation of consequential events in 2026, that unpredictability is not likely to diminish. The manager continues to adhere to their disciplined investment approach by staying focused on high-quality companies with enduring competitive advantages despite these uncertainties.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 21 2026 | 2025 Q4 | AAPL, AMD, AMZN, APH, AVGO, CDNS, GOOG, GOOGL, ITX.MC, LLY, LPLA, META, MRK, MSFT, NFLX, NKE, NOW, NVDA, TSLA, TSM | AI, growth, healthcare, large cap, semiconductors, technology |
APH MRK |
AI infrastructure spending concerns weighed on some positions like Microsoft and Meta, while AI-driven demand supported Taiwan Semiconductor's advanced manufacturing nodes. The fund initiated a… |
| Oct 17 2025 | 2025 Q3 | AAPL, AMD, APPL, AVGO, DIS, MSFT, NFLX, ORCL, SHOP, TOST, TSM, TTD, VRTX | Artificial Intelligence, Cloud Computing, Growth Stocks, semiconductors, Technology leadership |
AMD US TOST US ORCL US |
Harbors manager cites AI-driven innovation as the dominant force behind market gains, though warns of valuation risk in mega-cap tech. The fund added exposure to… |
| Jul 22 2025 | 2025 Q2 | AAPL, AVGO, BSX, CEG, HUBS, MA, NFLX, NVDA, SHOP | AI Adoption, Balance Sheets, earnings momentum, innovation, Large Cap Growth |
HUBS SHOP BSX |
The commentary highlights resilient U.S. large-cap growth driven by AI adoption, strong earnings momentum, and corporate innovation despite tariff-related volatility. Management stresses bottom-up stock selection… |
| Mar 31 2025 | 2025 Q1 | CEG, FLUT, GE, NFLX, SBUX, TSM, VRTX | - | - | - |
| Jun 30 2024 | 2024 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 |
GLP1Eli Lilly represents the fund's exposure to the GLP-1 obesity and diabetes treatment market, which continues to show exceptional growth. Mounjaro and Zepbound sales more than doubled year-over-year, with demand continuing to outpace supply. The fund sees this as a multi-decade growth opportunity with expanding indications and sustained competitive advantages. |
Obesity Diabetes Pharmaceuticals Growth Innovation | |
| 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 |
Growth |
||
Technology |
||
| 2025 Q2 |
Growth |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 17, 2025 | Fund Letters | Kathleen A. McCarragher | TOST US | Toast, Inc. | Information Technology | Application Software | Bull | NYSE | efficiency, expansion, growth, recurring revenue, SaaS, Software, valuation | Login |
| Oct 17, 2025 | Fund Letters | Kathleen A. McCarragher | ORCL US | Oracle Corp. | Information Technology | Systems Software | Bull | NYSE | AI, cloud, growth, Margins, Partnerships, Software, valuation | Login |
| Jul 22, 2025 | Fund Letters | Kathleen A. McCarragher | HUBS | HubSpot, Inc. | Information Technology | Application Software | Bull | New York Stock Exchange | CRM, Enterprises, growth, Margins, SaaS, Subscriptions | Login |
| Jul 22, 2025 | Fund Letters | Kathleen A. McCarragher | SHOP | Shopify Inc. | Information Technology | E-commerce & Auction Services | Bull | NASDAQ | ecommerce, Globalization, Merchants, Platforms, profitability, Subscriptions | Login |
| Jul 22, 2025 | Fund Letters | Kathleen A. McCarragher | BSX | Boston Scientific Corporation | Health Care | Health Care Equipment | Bull | New York Stock Exchange | Cardiology, Devices, innovation, Margins, Medtech, Procedures | Login |
| Jan 21, 2026 | Fund Letters | Kathleen A. McCarragher | APH | Amphenol Corporation | Information Technology | Electronic Components | Bull | New York Stock Exchange | AI, Connectivity, datacenters, infrastructure, semiconductors | Login |
| Jan 21, 2026 | Fund Letters | Kathleen A. McCarragher | MRK | Merck & Co., Inc. | Health Care | Pharmaceuticals | Bull | New York Stock Exchange | earnings, innovation, Oncology, pharmaceuticals, pipeline | Login |
| Oct 17, 2025 | Fund Letters | Kathleen A. McCarragher | AMD US | Advanced Micro Devices, Inc. | Information Technology | Semiconductors | Bull | NASDAQ | AI, data centers, growth, innovation, Margins, semiconductors, valuation | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | Apple Inc. represents 1.6% of company owned with cost basis of $6,255 million and market value of $61,962 million, providing $280 million in 2025 dividends. |
| AMD | AMD was mentioned as an example of businesses that already make money, have shown they can do so through cycles and are priced so that we do not need everything to go right. |
| AMZN | One company we own that we think has unique positioning to benefit from both the infrastructure and application layers is Amazon. Amazon's logistical prowess is one of the foremost moats in business today and it can and will be enhanced with AI. The company will do this in multiple ways, with better orchestration of its logistics assets and underlying cargo, as well as the buildout of more capable, sophisticated and robust robotics. Amazon is singularly well positioned to dominate the coordination layer, with AI's help, across its entire logistics network. |
| APH | We trimmed Amphenol Corp. |
| AVGO | The primary contributors to its performance were our exposures to Broadcom |
| CDNS | Cadence, Linde, United Rentals, and Progressive rounded out the top-five detractors in the quarter. |
| GOOG | From the moment OpenAI hit the scene with ChatGPT 3.5 in the Fall of 2022, Google was a perceived loser and thousands of pontificators warned about the end of search. Fast forward three years and this was Google Search's fastest quarter of revenue growth since Q1 2022, when the reopening and pandemic were still considerable drivers of results. In parallel with the Search re-acceleration, Google has also emerged as a leader in AI itself. This combination has been potent for Google's stock and could not have opened on Search alone, given the terminal value fears. |
| 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. |
| ITX.MC | Inditex, the global fast fashion leader, performed well in Q4 as its products within Zara are resonating with consumers. |
| LLY | Eli Lilly shares were a top performer in 4Q25 after delivering strong Q3 2025 earnings in October. Revenue rose 54% year-over-year to $17.6 billion, and adjusted EPS of $7.02 beat consensus of $6.02. Growth was driven by its GLP-1 franchises, Mounjaro and Zepbound, where sales more than doubled year-over-year, alongside strength in other therapeutic areas. Management raised full-year guidance for both revenue and earnings, reinforcing investor confidence in the company's growth outlook. |
| LPLA | Additionally, a position in the leading US independent broker-dealer LPL Financial was established. LPL is well positioned to benefit from the ongoing shift toward fee-based wealth management and greater adviser independence. The company has delivered impressive organic revenue growth over time, targeting the 7–13% range, reflecting strong advisor recruitment and the firm's ongoing ability to attract advisers who are switching platforms. This momentum has translated into consistent net new asset inflows and robust revenue growth, while technology investments continue to enhance their platform stickiness and operating leverage. Although LPL does possess interest rate sensitivity through its cash sweep program, which is a meaningful earnings contributor, we are comfortable that consensus and buyside expectations already embed a prudent buffer for interest rate cuts through to 2027. Trading at a reasonable valuation relative to its growth profile and capital return potential, LPL offers a compelling risk-reward profile and exposure to structural tailwinds in wealth management. |
| 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. |
| MRK | Top gainers in the Fund this quarter included Merck (+26%) |
| 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. |
| NKE | Notable positive contributions from the Fund's short book in December include National Vision Holdings, Nike, and Starbucks. |
| NOW | In the case of ServiceNow, the stock weakened following reports of a potential large acquisition while the company has also been challenged by bearish sentiment across the software as a service or SAAS segment. |
| NVDA | AI bellwether NVIDIA's very strong set of earnings in late November helped the AI theme re-assert its dominance when investors breathed a sigh of relief following the results. |
| 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. |
| TSM | TSMC was a top contributor during the quarter, driven by robust demand for advanced semiconductor manufacturing and improved gross margins as AI continues to grow strong and the non-AI segment showed signs of recovery. Management raised its revenue growth guidance to the mid-30% range, and given continued strength in demand, AI-related growth targets are expected to move above the current mid-40% level. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
