| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 7.6% | 3.6% | 8.1% |
| 2025 |
|---|
| 8.1% |
Next Century Growth Investors' SMID Cap Growth strategy returned 3.61% in Q4 2025 and 8.12% for the full year, underperforming the Russell 2500 Growth Index which returned 10.30% annually. The firm faced significant headwinds as 2025 was the second biggest underperformance year for active managers historically, driven by quality factors working against them. Low-quality stocks with negative earnings and speculative areas like biotech, quantum computing, and bitcoin miners significantly outperformed, while the firm maintained their discipline of investing in high-quality companies with proven business models. Despite near-term challenges, they remain optimistic about small cap prospects, noting that small cap earnings growth turned positive in 2025 and is expected to accelerate in 2026. The Fed's rate cuts and pro-growth policies provide additional tailwinds. The firm added 13 new positions in Q4 across technology, healthcare, and materials sectors while maintaining sector overweights in industrials, technology, and healthcare. They believe their long-term focus on quality growth companies will drive future outperformance.
Next Century Growth Investors maintains their focus on investing in high-quality growth companies with proven business models and sustainable growth drivers, believing this approach will lead to long-term outperformance despite near-term headwinds from quality factors working against active managers.
The firm believes the environment could be improving for small cap stock performance, with small cap earnings expected to stay positive and potentially accelerate in 2026. They see Fed rate cuts as supportive, and believe small caps trading at a discount to large caps presents opportunity for the discount to narrow.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 21 2026 | 2025 Q4 | ADPT, AII.TO, ATEC, AXGN, BETA, BLND, CELH, COHR, ELF, INOD, KVYO, MTSI, PCOR, PEGA, PHAT, PI, QTWO, TOL, TTAN, UAMY, UTI, WULF | Biotechnology, growth, healthcare, Quality, small caps, technology | - | The firm emphasizes investing in high-quality growth companies with proven business models and sustainable growth drivers. They believe quality factors worked against active managers in… |
| Oct 24 2025 | 2025 Q3 | - | industrials, Rate Cuts, semiconductors, SMID, technology | - | SMID caps trailed speculative segments, but the portfolio emphasizes company-specific growth in industrials and diversified technology (software, semis, AI infrastructure). Exposure to basic materials tied… |
| Aug 7 2025 | 2025 Q2 | - | consumer, growth, small caps, technology, valuation | - | - |
| Mar 31 2025 | 2025 Q1 | - | - | - | - |
| Dec 31 2023 | 2023 Q4 | BRZE, CSTL, CWAN, DAVA, DXCM, GWRE, MEDP, NTRA, TNDM, VRT | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
BiotechnologyBiotech delivered its best quarter in five years, benefiting from improving interest rates, easing regulation enabling more M&A activity, and excitement around AI's promise in drug discovery. The portfolio nearly doubled its biotech exposure during the quarter as more opportunities presented themselves in this improving environment. |
Drug Discovery M&A Interest Rates Regulation Pharmaceuticals |
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 CapsThe fund invests in a portfolio of competitively advantaged small and medium-sized businesses, which remained out of favor for most of the quarter. The strategy of owning leading small-cap businesses has been the foundation since inception, delivering 354 basis points of annual outperformance over the benchmark since inception despite recent headwinds. |
Growth Outperformance Benchmark Russell Businesses | |
| 2025 Q3 |
IndustrialsThe fund increased exposure to high-quality industrial businesses with potential for cyclical upturn. Added Quanta Services for AI data center build-out, Hubbell for electrical grid upgrades, Old Dominion for freight cycle recovery, and Waste Connections for secondary market focus. |
Infrastructure Automation Transportation Electrical Equipment Waste Management |
| 2025 Q2 |
Growth |
|
Small CapsThe fund invests in a portfolio of competitively advantaged small and medium-sized businesses, which remained out of favor for most of the quarter. The strategy of owning leading small-cap businesses has been the foundation since inception, delivering 354 basis points of annual outperformance over the benchmark since inception despite recent headwinds. |
Growth Outperformance Benchmark Russell Businesses |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| AII.TO | We added 8 new positions in Q4: two in basic materials: Almonty Industries, United States Antimony |
| ATEC | Alphatec's shares rose and contributed to performance after a strong earnings report highlighted accelerating sales, market share gains in the spine segment and improved profitability. |
| AXGN | New to the strategy was Axogen, Inc., which develops technologies for peripheral nerve regeneration and repair from injuries caused by trauma, chronic conditions, or surgical procedures. Its flagship product, Avance Nerve Graft, is a decellularized human nerve allograft that preserves native nerve microarchitecture while eliminating immune rejection risk. It is the only FDA-approved implantable biological nerve allograft on the market. |
| BETA | BETA Technologies is an aerospace and defense company developing electric aircraft, propulsion systems and charging infrastructure for government, logistics and commercial applications. Its vertically integrated model, lower operating cost structure and focus on conventional takeoff aircraft provides multiple avenues for long-term growth. |
| CELH | Security selection within the Consumer Staples sector also detracted from relative performance, driven by an allocation to Celsius Holdings, Inc. (1.1%), a developer of energy drinks. |
| COHR | Copart is the leading global marketplace for damaged and end-of-life vehicles, sitting between insurance companies that need to dispose of total-loss cars and a fragmented, worldwide base of dismantlers, rebuilders, dealers, and exporters. Against that backdrop, the last four quarters have been stronger in the business than in the stock. Revenue and operating income have continued to grow, helped by steady fee-per-unit gains, higher international contribution, and ongoing expansion of yards and services. These concerns about near-term volume and a supposedly resurgent competitor have weighed on sentiment, and the share price has reflected that—Copart is down roughly 30% in 2025. |
| ELF | e.l.f. Beauty's earnings report included a decline in core domestic sales growth and fiscal year guidance below expectations. We continue to hold the stock, as the company offers a strong product set addressing a favorable spending category, though additional progress is needed to restore positive fundamental and share-price performance. |
| INOD | Top 3 detractors to absolute performance: UTI, INOD, AMSC |
| MTSI | Semiconductor holding MACOM Technology Solutions rose nearly +40%, as the company experienced broad-based demand, similar to many semiconductor companies in 2025. |
| PHAT | We added 8 new positions in Q4: four in health care: Axogen, Phathom Pharmaceuticals, Personalis, Tactile Systems Technology |
| PI | Impinj is a leading semiconductor manufacturer specialising in radio frequency identification (RFID) technology. While RFID adoption is accelerating, it is still in the early stages of replacing legacy identification solutions, and we believe Impinj is well positioned to capitalise on this technological shift. |
| TOL | Our homebuilding companies were the weakest performers this quarter with Builders FirstSource (BLDR) and Toll Brothers (TOL), both landing on our list of bottom 5 detractors. We remain bullish on the long-term prospects for the homebuilding sector as we believe there is a shortage of housing and these companies trade for large discounts to their intrinsic values. We added to our position in both companies this quarter. |
| TTAN | ServiceTitan is a leading provider of vertical software solutions for the trades, including plumbing, HVAC and electrical. Its platform supports the entire workflow from lead generation to payment, generating revenue through subscriptions and usage-based processing. We see meaningful growth opportunities through new customer acquisition, upselling and expansion into additional trades. During the quarter, we increased our position following a pullback amid broader software industry weakness, reflecting our conviction in the durability of its profit cycle. |
| UAMY | Antimony Corporation (UAMY) was a top contributor. UAMY has taken advantage of the export restrictions of antimony for military use out of China by winning a $245 million five-year sole source contract to rebuild the U.S. antimony supply. Given the volatility in the name and the speed at which it appreciated, along with further announcements of new antinomy processing investments by other players, we exited the name. |
| UTI | Top 3 detractors to absolute performance: UTI, INOD, AMSC |
| WULF | TeraWulf Inc. represents 1.8% of the strategy in the Information Technology sector. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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