| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
| 2024 |
|---|
| 23.0% |
Moon Capital Management's Q4 2025 letter emphasizes the disconnect between alarming headlines and market performance, as the S&P 500 delivered positive returns despite geopolitical tensions, trade wars, and recession fears. The manager argues that earnings growth of approximately 13% drove market appreciation, reinforcing that fundamentals matter more than narratives over time. The firm recently initiated a position in Molina Healthcare at $160 per share, down from $300 six months prior, viewing it as a mispriced compounder experiencing transitory margin pressure. Molina serves 5.6 million Medicaid members and continues generating profits despite industry-wide losses, with medical loss ratios running 250 basis points better than peers. The manager sees 2-3x upside potential as Medicaid rate resets normalize margins through contractual mechanisms requiring actuarial soundness. The investment thesis reflects the firm's philosophy of focusing on business fundamentals during periods of uncertainty, when patient capital allocation typically creates the most wealth.
Focus on business fundamentals over market narratives, as earnings remain the primary driver of stock prices over time, with patient capital allocation during periods of uncertainty creating long-term wealth.
The manager expects Medicaid margins to normalize over time due to contractual rate reset mechanisms, with Molina positioned to benefit from its operational outperformance. Long-term earnings power is substantial, with the company potentially generating over $30 in normalized EPS at target margins.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 15 2026 | 2025 Q4 | AAPL, MOH, NVDA | Compounding, fundamentals, healthcare, Managed Care, Margins, Medicaid, value | MOH | Molina Healthcare represents a mispriced compounder experiencing transitory margin pressure in the Medicaid industry. The company serves 5.6 million members with Medicaid representing 75% of… |
| Oct 10 2025 | 2025 Q3 | - | AI, Bubble, fundamentals, Speculation, valuation | - | The letter warns of speculative excesses in AI comparable to the late-1990s tech bubble, citing massive AI capex by hyperscalers and venture firms. It advocates… |
| Apr 7 2025 | 2025 Q1 | - | - | - | - |
| Jan 8 2025 | 2024 Q4 | CVS, GS, KKR | - | - | - |
| Jul 12 2024 | 2024 Q2 | NTB | - | - | - |
| Apr 26 2024 | 2024 Q1 | BTI | - | - | - |
| Jan 26 2024 | 2023 Q4 | GRBK, MBIN | - | - | - |
| Jul 19 2023 | 2023 Q2 | CNQ, FAF, FHN, MLNK | - | - | - |
| Dec 1 2023 | 2022 Q4 | ABBV, CI, DVA, GRBK, LGIH, MCK | - | - | - |
| Jul 10 2022 | 2022 Q3 | ALLY, SOBKY, SYF | - | - | - |
| Jun 7 2022 | 2022 Q2 | META | - | - | - |
| Jul 4 2022 | 2022 Q1 | 0A53LN, APPS, EPAM, FFX GR | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
Managed CareUnitedHealth and Elevance faced multi-year fundamental pain from rising healthcare utilization and volatile medical costs. The managed care industry is under-earning across most business lines due to repricing challenges and regulatory constraints. Policy risk has increased with renewed scrutiny of industry business practices including prior authorizations and pharmacy benefit management. |
Healthcare Insurance Medicaid Medicare Utilization |
| 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 |
Bubble |
||
ValuationAI-related companies continue to command premium valuations while other sectors remain reasonably priced. This valuation divide continues to guide investment activity, with the fund remaining wary of companies trading at exceedingly high valuations that imply exceptional multi-year earnings growth. |
Premium Divide Discipline Stretched Reasonable |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 15, 2026 | Fund Letters | Garrett Arms | MOH | Molina Healthcare, Inc. | Health Care | Managed Health Care | Bull | New York Stock Exchange | buybacks, managed care, margin normalization, Medicaid, Rate Resets | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | The largest 10 companies, by market capitalization, had reached 40.7% of the S&P 500 by the end of 2025, up from roughly 30% at the end of 2021. At the top of this list are Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Broadcom (AVGO), Meta (META), and Tesla (TSLA). Apple: Market capitalization near $4 trillion. A double requires creating a company larger than the size of Walmart, JPMorgan, and Pfizer combined. |
| MOH | We recently initiated a position in Molina Healthcare (MOH), which we believe is a mispriced compounder experiencing transitory margin pressure. The stock traded as high as $300 per share only six months ago; we purchased our shares at approximately $160 in late December. Molina provides managed healthcare services primarily to low-income families and individuals via Medicaid, Medicare and the various state marketplaces established by the 2010 Affordable Care Act (Obamacare). The company is an example of a situation in which the stock price decline has been vastly exacerbated by negative political news—and mostly disconnected from the company's actual business fundamentals. In our view, the market's reaction extrapolates short-term pressures indefinitely and underappreciates both the structural dynamics of Medicaid rate resets and Molina's long track record of operational outperformance versus peers. We see a credible path to 2–3x upside over the next several years as margins normalize and earnings power becomes evident. |
| NVDA | Nvidia sits at the top of the S&P 500 as the designer in the AI ecosystem. |
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