NCG SMID Cap Growth Strategy

Investor Summary

Next Century Growth Investors was founded in November 1998 by Tom Press with over 100 years of combined investment experience among the leadership team. The firm has experienced no portfolio manager turnover in its 27-year history and is 80% owned by active portfolio manager partners, ensuring independence and alignment of interests. Key leaders include Tom Press (Founder, Chairman, 42 years industry experience), Bob Scott (CEO as of January 1, 2026, Portfolio Manager, 32 years experience), and Peter Capouch (President, Portfolio Manager, Harvard background). The firm achieved top domestic equity fund ranking in Morningstar's separate account universe over the five-year period ending December 31, 2021, with their microcap strategy delivering 43.18% annualized gross returns. The leadership team has demonstrated consistent outperformance across small, SMID, and micro cap strategies.

Fund Strategy

NCG seeks to invest in the fastest-growing and highest-quality companies in America with strong competitive advantages, sustainable revenue growth above 15%, and solid management teams. The SMID Cap Growth Strategy targets companies demonstrating superior revenue growth, operating in large market opportunities, holding market leadership or disruptive positions, having strong management teams, and showing potential for substantial future cash flow generation. The firm employs a bottom-up fundamental research approach using a team-based investment process with all portfolio managers serving as generalists. Portfolio construction emphasizes diversification and risk management, with individual positions limited to 5% and sector exposure capped at double index weight or 10%. The strategy maintains a concentrated portfolio of 40-60 securities and adheres to a strong sell discipline based on changes in investment thesis, extended valuations, or replacement with more attractive opportunities.

ANNUALIZED SINCE INCEPTION	QUARTERLY	YTD
8.97%	44.83%	45.11%

Executive Summary

Next Century Growth Investors' SMID Cap Growth Strategy delivered 44.83% net returns in Q2 2026, outperforming the Russell 2500 Growth Index by over 2,000 basis points, driven by exceptional stock selection in technology and industrials. Semiconductor holdings returned 90-120% in aggregate as AI infrastructure spending accelerated, with roughly $700 billion of hyperscaler capex committed for the year. Small caps posted their strongest first half since 1991, benefiting from accelerating earnings growth, attractive relative valuations, and market broadening beyond mega-caps. The manager trimmed technology positions after strong gains expanded valuations considerably, redeploying capital into health care, industrials, financials, and software. The portfolio added 10 new positions and exited 12 during the quarter. Looking ahead, the manager views conditions as especially favorable for small caps given accelerating fundamentals and reasonable valuations, while large cap growth faces elevated expectations. Key risks include above-target inflation at 4.2%, potential Fed rate hikes, and elevated valuations in parts of the market. The manager maintains conviction in high-quality growth businesses tied to durable, multi-year cycles including AI, semiconductors, data centers, defense, and onshoring.

Core Thesis

Next Century Growth Investors focuses on high-quality growth businesses with durable competitive advantages, strong balance sheets, and long-term earnings power, emphasizing concentrated positions in companies tied to multi-year investment cycles including AI infrastructure, semiconductors, data-center buildout, aerospace and defense, and reshored manufacturing.

Forward Outlook

The manager believes the investment backdrop remains constructive for high-quality growth investing, with the U.S. economy proving more resilient than expected and corporate earnings on pace to deliver strong growth in 2026. Conditions remain especially favorable for continued market broadening in favor of small cap stocks, which still trade at attractive relative valuations despite the rally. The manager expects a more selective environment for large cap growth investors given high expectations and elevated valuations. While geopolitical risk, above-target inflation, and elevated valuations remain concerns, the manager believes environments marked by shifting leadership, dispersion, and rapid capital reallocation tend to reward disciplined, fundamentally driven active managers.

Date	Letter	Tickers	Keywords	Pitches	Quick Takes
Jul 20 2026	2026 Q2	-	AI, earnings, growth, industrials, Onshoring, semiconductors, small caps, technology	-	Next Century's SMID Cap strategy surged 44.83% in Q2 2026, crushing benchmarks by over 2,000 basis points on exceptional semiconductor and AI infrastructure performance. Small caps delivered their strongest first half since 1991 as earnings accelerated and markets broadened. The manager trimmed tech winners after valuations expanded, rotating into health care, industrials, and software. Multi-year tailwinds in AI, data centers, defense, and onshoring remain intact despite inflation concerns.
Apr 22 2026	2026 Q1	-	AI Infrastructure, Critical Minerals, defense, growth, industrials, small cap, technology	-	NCG's SMID Cap strategy outperformed significantly in 1Q26, driven by AI infrastructure, defense, and critical minerals exposure. The firm sees compelling small cap opportunities with positive earnings momentum, attractive valuations versus large caps, and supportive Fed policy. Active portfolio management added 11 new positions while maintaining focus on high-quality growth businesses with durable competitive advantages.
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	-	NCG's SMID Cap strategy underperformed in 2025 as quality factors worked against active managers, with speculative low-quality stocks significantly outperforming. The firm maintained discipline investing in high-quality growth companies despite headwinds. They're optimistic on small caps given positive earnings growth trends, Fed rate cuts, and pro-growth policies creating improving fundamentals.
Oct 24 2025	2025 Q3	AAON, ADMA, AEHR, APLD, AVAV, BE, CDNA, FROG, KVYO, LEU, MIRM, MP, PAR, PGY, PI, PL, PRCH, SPRY, STRL, TOL, XMTR	AI, earnings, growth, industrials, infrastructure, Rate Cuts, small caps, technology	-	NCG's SMID Cap Growth strategy underperformed in 3Q25 as speculative areas dominated small cap returns, but the firm sees significant positives ahead including Fed rate cuts, accelerating small cap earnings, and pro-growth policies. They maintain focus on high-quality growth companies while adding 19 new positions, believing their disciplined approach will drive long-term outperformance over current market speculation.
Aug 7 2025	2025 Q2	ALHC, CDNA, CELH, CRS, ELF, GDYN, SAIA, SPRY, STRL, TMDX, TTAN, VRT	growth, healthcare, infrastructure, rates, small caps, technology, Trade Policy	-	NCG's SMID Cap strategy outperformed in Q2 despite early tariff-related volatility. The firm sees compelling opportunities in small cap growth stocks given historically poor relative performance and attractive valuations. Key catalysts include potential Fed rate cuts, infrastructure spending acceleration, and trade policy flexibility. NCG maintains focus on high-quality growth companies through disciplined research and portfolio construction.
Mar 31 2025	2025 Q1	AGYS, ALHC, AORT, ATEC, ATRO, BROS, CAVA, FLYW, GLBE, INOD, IRTC, OS, PEGA, PEN, QNST, SAIA, SITM, UTI, VERX, WAY	growth, healthcare, industrials, small cap, technology, uncertainty, underperformance	-	NCG's SMID Cap strategy underperformed in Q1 amid policy uncertainty from the new administration causing growth concerns and recession fears. Technology and industrials holdings weighed on performance. Despite near-term headwinds, the firm maintains conviction in high-quality growth companies, sees potential Fed support and infrastructure spending acceleration, and believes small cap valuations are attractive.
Dec 31 2023	2023 Q4	BRZE, CSTL, CWAN, DAVA, DXCM, FLYW, GWRE, KNSL, LGIH, MEDP, NTRA, SILD, TMDX, TNDM, VRRM, VRT	Biotech, growth, healthcare, Medical Devices, small caps, technology	MEDP BRZE ACGL\|APH\|COO\|CSGP\|DKNG\|GWRE\|IDXX\|IOT\|IT\|LPLA\|MSCI\|MTD\|PCOR\|ROP\|TECH\|VRSK ARGX BB\|DAVA\|DDOG\|GLOB\|ILMN\|LOAR\|MELI\|NET\|NU\|NVDA\|TSM NTRA ASIC\|CWAN\|INSP\|KRMN\|KTOS\|MAC\|MEG\|RH\|WYNN TNDM CSTL MELI\|NFLX\|ORCL\|TCOM\|VRTX\|YUMC DXCM	NCG's SMID Cap strategy underperformed in Q4 2023 due to healthcare headwinds from GLP-1 concerns, though the firm added quality names across healthcare and technology. The Fed pivot broadened market participation but favored lower quality stocks. With reasonable valuations and strong new idea generation, the firm remains confident in their high-quality growth approach for long-term outperformance.

Date

Letter

Tickers

Keywords

Pitches

Quick Takes

Jul 20 2026

2026 Q2

AI, earnings, growth, industrials, Onshoring, semiconductors, small caps, technology

Next Century's SMID Cap strategy surged 44.83% in Q2 2026, crushing benchmarks by over 2,000 basis points on exceptional semiconductor and AI infrastructure performance. Small caps delivered their strongest first half since 1991 as earnings accelerated and markets broadened. The manager trimmed tech winners after valuations expanded, rotating into health care, industrials, and software. Multi-year tailwinds in AI, data centers, defense, and onshoring remain intact despite inflation concerns.

Apr 22 2026

2026 Q1

AI Infrastructure, Critical Minerals, defense, growth, industrials, small cap, technology

NCG's SMID Cap strategy outperformed significantly in 1Q26, driven by AI infrastructure, defense, and critical minerals exposure. The firm sees compelling small cap opportunities with positive earnings momentum, attractive valuations versus large caps, and supportive Fed policy. Active portfolio management added 11 new positions while maintaining focus on high-quality growth businesses with durable competitive advantages.

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

NCG's SMID Cap strategy underperformed in 2025 as quality factors worked against active managers, with speculative low-quality stocks significantly outperforming. The firm maintained discipline investing in high-quality growth companies despite headwinds. They're optimistic on small caps given positive earnings growth trends, Fed rate cuts, and pro-growth policies creating improving fundamentals.

Oct 24 2025

2025 Q3

AAON, ADMA, AEHR, APLD, AVAV, BE, CDNA, FROG, KVYO, LEU, MIRM, MP, PAR, PGY, PI, PL, PRCH, SPRY, STRL, TOL, XMTR

AI, earnings, growth, industrials, infrastructure, Rate Cuts, small caps, technology

NCG's SMID Cap Growth strategy underperformed in 3Q25 as speculative areas dominated small cap returns, but the firm sees significant positives ahead including Fed rate cuts, accelerating small cap earnings, and pro-growth policies. They maintain focus on high-quality growth companies while adding 19 new positions, believing their disciplined approach will drive long-term outperformance over current market speculation.

Aug 7 2025

2025 Q2

ALHC, CDNA, CELH, CRS, ELF, GDYN, SAIA, SPRY, STRL, TMDX, TTAN, VRT

growth, healthcare, infrastructure, rates, small caps, technology, Trade Policy

NCG's SMID Cap strategy outperformed in Q2 despite early tariff-related volatility. The firm sees compelling opportunities in small cap growth stocks given historically poor relative performance and attractive valuations. Key catalysts include potential Fed rate cuts, infrastructure spending acceleration, and trade policy flexibility. NCG maintains focus on high-quality growth companies through disciplined research and portfolio construction.

Mar 31 2025

2025 Q1

AGYS, ALHC, AORT, ATEC, ATRO, BROS, CAVA, FLYW, GLBE, INOD, IRTC, OS, PEGA, PEN, QNST, SAIA, SITM, UTI, VERX, WAY

growth, healthcare, industrials, small cap, technology, uncertainty, underperformance

NCG's SMID Cap strategy underperformed in Q1 amid policy uncertainty from the new administration causing growth concerns and recession fears. Technology and industrials holdings weighed on performance. Despite near-term headwinds, the firm maintains conviction in high-quality growth companies, sees potential Fed support and infrastructure spending acceleration, and believes small cap valuations are attractive.

Dec 31 2023

2023 Q4

BRZE, CSTL, CWAN, DAVA, DXCM, FLYW, GWRE, KNSL, LGIH, MEDP, NTRA, SILD, TMDX, TNDM, VRRM, VRT

Biotech, growth, healthcare, Medical Devices, small caps, technology

NCG's SMID Cap strategy underperformed in Q4 2023 due to healthcare headwinds from GLP-1 concerns, though the firm added quality names across healthcare and technology. The Fed pivot broadened market participation but favored lower quality stocks. With reasonable valuations and strong new idea generation, the firm remains confident in their high-quality growth approach for long-term outperformance.

QUARTER	THEMES	TAGS
2026 Q2	AI AI infrastructure spending drove exceptional performance across the portfolio, with roughly $700 billion of hyperscaler capex committed for the year. Semiconductors, networking, power and data-center-related equities powered returns. The manager trimmed exposure after strong gains in April and May as valuations expanded considerably, while maintaining conviction in multi-year growth drivers.	Semiconductors Data Centers Infrastructure Capex
	Semiconductors Semiconductor holdings returned between 90% and 120% in aggregate and drove more than 1,000 basis points of positive selection versus benchmarks. The Philadelphia Semiconductor Index posted its best quarter on record, with memory names seeing historic moves. Manager trimmed positions after strong performance but maintains conviction in the cycle.	Memory Semiconductor Cycle Semi Equipment
	Small Caps Small caps posted their strongest first half since 1991, with the Russell 2000 Growth up 25.7% and Russell Microcap Growth up nearly 29%. Small cap earnings growth turned positive in 2025 and is now accelerating. Manager views the combination of accelerating fundamentals, improving breadth, and reasonable valuations as creating a compelling multi-year setup.	Earnings Value Market Broadening
	Defense Defense holdings contributed meaningfully to industrials performance, driven by continued strength in defense budgets. Aerospace and defense exposure performed exceptionally well alongside other industrial themes tied to reshoring and capital spending.	Defense Spending Aerospace Government
	Onshoring Reshoring-linked capital spending drove strong performance in industrials holdings tied to specialized manufacturing. The One Big Beautiful Bill Act's capital-spending incentives continue to support the domestic industrial, technology, and infrastructure economy. Manager views this as a multi-year tailwind.	Industrial Policy Infrastructure Spending Manufacturing
	Data Centers Holdings tied to data-center site development and electrical infrastructure performed exceptionally well, driven by continued AI-related site work and power infrastructure buildout. This was a major driver of industrials performance across the portfolio.	AI Infrastructure Power Equipment Construction
	Earnings Corporate earnings are on pace to deliver strong growth in 2026, with more than 80% of S&P 500 companies beating estimates and earnings growing over 25% year-over-year in Q1. Small cap earnings growth turned positive in 2025 and is now accelerating. The surge in earnings has compressed forward valuation multiples, providing a healthier fundamental foundation.	Growth Fundamentals Quality
2026 Q1	AI AI infrastructure investments including semiconductors, optical components, power buildout and site development performed well as spending on computing capacity, networking, and data-center build-outs remained robust. Technology performance was driven by semiconductors, optical components, and test equipment holdings.	Infrastructure Semiconductors Data Centers Computing Networking
	Defense Spending Aerospace and defense holdings contributed positively, supported by elevated global defense spending and growing order backlogs. The portfolio is overweight in the industrial sector with holdings in aerospace & defense among other areas.	Aerospace Defense Order Backlogs Global Spending
	Critical Minerals Basic materials positions benefited from supply-demand imbalances and pricing resilience. The portfolio is overweight basic materials with holdings consisting of companies in the rare/critical minerals market selling into aerospace and general industrial industries.	Supply Demand Pricing Rare Earths Industrial
	Small Caps Small cap earnings growth turned positive during 2025 and is expected to stay positive and potentially accelerate in 2026. Small cap stocks continue to trade at attractive valuations relative to large cap stocks, presenting further opportunities combined with an improving fundamental backdrop.	Earnings Growth Valuations Fundamentals Opportunities
2025 Q4	AI Pershing Square views AI as a major driver of market performance and structural growth. The firm believes megacap companies they own are well-positioned to benefit from AI integration, with Alphabet seen as a clear beneficiary of AI integration and Meta's AI-related spending initiatives viewed as underestimated by the market for long-term upside potential.	Artificial Intelligence Technology Cloud Data Centers Software
	Megacaps The firm has increased exposure to high-quality, higher-growth megacap companies, believing they offer structurally higher growth than most S&P 500 companies at only modestly higher multiples. They view these companies as having sustainable competitive moats and long-term secular growth characteristics that justify higher valuations.	Large Cap Technology Growth Quality Concentration
	Earnings Pershing Square emphasizes that elevated earnings growth has been the primary driver of market returns, with S&P 500 annualized returns of 13% from 2020-2025 driven by 10% EPS growth. They believe most top ten companies have sustainable competitive advantages that will allow for continued high rates of EPS growth.	Growth Fundamentals Valuation Performance
	Alternative Asset Managers Through their Brookfield investment, Pershing Square is positioned in the alternative asset management space, viewing Brookfield as a leading asset-rich alternative asset manager with deep domain expertise positioned to benefit from multi-trillion-dollar AI-related infrastructure investment.	Asset Management Infrastructure Private Equity Real Estate
	Insurance Pershing Square is making a significant investment in the insurance sector through HHH's acquisition of Vantage Group Holdings, a leading specialty insurance and reinsurance company. They view this as an ideal transaction to begin HHH's transformation into a diversified holding company with attractive return profiles.	Insurance Reinsurance Specialty Insurance Financial Services
2025 Q3	AI Artificial intelligence presents great promise for enhancing business models and improving productivity long-term. In the near-term, the infrastructure needed to support the AI buildout is spurring significant investment and capital expenditures, driving new growth opportunities for innovative companies across technology, industrials, and energy sectors.	Infrastructure Productivity Technology Investment Growth
	Infrastructure Spending The new administration has implemented pro-growth policies including infrastructure spending, manufacturing re-shoring, critical mineral and pharmaceutical production, and defense spending. These policies are expected to support growth across many sectors of the domestic economy and create direct beneficiaries among portfolio companies.	Pro-growth Manufacturing Defense Domestic Policy
	Small Caps Small cap earnings growth is projected to be positive and accelerate throughout 2025 after two years of declines, with 2026 potentially seeing small cap earnings growth outpace large cap. Small caps are prime beneficiaries in past rate-cutting cycles, and the rolling 10-year relative performance versus large caps is in the 6th percentile historically.	Earnings Outperformance Rate Cuts Relative Performance Valuation
	Critical Minerals Critical minerals represents one of the speculative areas that saw significant rallies and material contribution to micro and small cap indices during 3Q. The firm has exposure through holdings in the rare earth materials market and added MP Materials to the portfolio during the quarter.	Rare Earths Speculation Materials Mining Supply Chain
2025 Q2	Infrastructure Spending Strong forces driving increased infrastructure spending in the US have been gaining momentum for the past couple years and remain intact. The new administration is working to accelerate this trend and NCG is finding companies which are direct beneficiaries.	Infrastructure Government Construction Industrials Policy
	Trade Policy President Trump's Liberation Day tariff announcement on April 2nd created considerable concern for global markets due to the breadth of countries included, level of tariff rates imposed, and short implementation timeframe. However, the administration later put in place a 90-day pause on tariff implementation and started talking about numerous ongoing trade deal negotiations.	Tariffs Trade Policy Global Negotiations
	Small Caps The rolling 10-year annualized return by small vs large stands at -7.3% and is the worst ever going back to 1926. The valuation of the small cap sector relative to large caps is in the 5th percentile historically. Small cap growth stocks participated in the recent up move, but further opportunity exists.	Small Cap Valuation Relative Performance Opportunity Growth
	Rates The Federal Reserve has held rates unchanged so far in 2025 following rate cuts totaling 100bps in the back half of 2024. The Fed remains committed to evaluating incoming data but has recently signaled a willingness to cut rates at some point this year. The market currently expects between two to three 25bp cuts in 2025.	Federal Reserve Interest Rates Monetary Policy Rate Cuts Economic Data
2025 Q1	Growth NCG emphasizes investing in what they believe are the fastest growing and highest quality companies in America. They maintain focus on companies that can grow revenue and profits at strong rates in any economic and market environment. The firm continues to seek high-quality growth companies selected using original research combined with strong sell discipline.	Growth Companies Revenue Growth Quality Fundamentals Long-term
	Infrastructure Spending The firm believes strong forces driving increased infrastructure spending in the US have been gaining momentum for the past couple years and remain intact. They feel the new administration is working to accelerate this trend and they are finding small companies which are direct beneficiaries of this infrastructure investment theme.	Infrastructure Government Spending Small Companies Beneficiaries Acceleration
2023 Q4	Healthcare Healthcare holdings drove much of the underperformance across strategies due to investor perception that GLP-1 drugs will reduce medical interventions. Many healthcare companies began recovering in Q4 and the firm believes in long-term growth fundamentals. The firm continues direct research to inform investment decisions in this space.	Biotechnology Medical Devices Diagnostics CRO & CDMO Pharmaceuticals
	Data Centers Worldwide datacenter capacity is poised to continue growing driven by AI, high performance computing, enterprise workloads moving to cloud, and social media proliferation. Vertiv operates in this space providing backup power and thermal management solutions.	Data Centers Cloud AI Infrastructure
	Diabetes The firm invested in both Tandem Diabetes Care for next-generation insulin pumps and DexCom for leading continuous glucose monitoring systems. Both companies serve the growing diabetes care market with innovative technology solutions.	Diabetes Devices Medical Devices Healthcare

QUARTER

THEMES

AI

AI infrastructure spending drove exceptional performance across the portfolio, with roughly $700 billion of hyperscaler capex committed for the year. Semiconductors, networking, power and data-center-related equities powered returns. The manager trimmed exposure after strong gains in April and May as valuations expanded considerably, while maintaining conviction in multi-year growth drivers.

Semiconductors Data Centers Infrastructure Capex

Semiconductors

Semiconductor holdings returned between 90% and 120% in aggregate and drove more than 1,000 basis points of positive selection versus benchmarks. The Philadelphia Semiconductor Index posted its best quarter on record, with memory names seeing historic moves. Manager trimmed positions after strong performance but maintains conviction in the cycle.

Memory Semiconductor Cycle Semi Equipment

Small Caps

Small caps posted their strongest first half since 1991, with the Russell 2000 Growth up 25.7% and Russell Microcap Growth up nearly 29%. Small cap earnings growth turned positive in 2025 and is now accelerating. Manager views the combination of accelerating fundamentals, improving breadth, and reasonable valuations as creating a compelling multi-year setup.

Earnings Value Market Broadening

Defense

Defense holdings contributed meaningfully to industrials performance, driven by continued strength in defense budgets. Aerospace and defense exposure performed exceptionally well alongside other industrial themes tied to reshoring and capital spending.

Defense Spending Aerospace Government

Onshoring

Reshoring-linked capital spending drove strong performance in industrials holdings tied to specialized manufacturing. The One Big Beautiful Bill Act's capital-spending incentives continue to support the domestic industrial, technology, and infrastructure economy. Manager views this as a multi-year tailwind.

Industrial Policy Infrastructure Spending Manufacturing

Data Centers

Holdings tied to data-center site development and electrical infrastructure performed exceptionally well, driven by continued AI-related site work and power infrastructure buildout. This was a major driver of industrials performance across the portfolio.

AI Infrastructure Power Equipment Construction

Earnings

Corporate earnings are on pace to deliver strong growth in 2026, with more than 80% of S&P 500 companies beating estimates and earnings growing over 25% year-over-year in Q1. Small cap earnings growth turned positive in 2025 and is now accelerating. The surge in earnings has compressed forward valuation multiples, providing a healthier fundamental foundation.

Growth Fundamentals Quality

2026 Q1

AI

AI infrastructure investments including semiconductors, optical components, power buildout and site development performed well as spending on computing capacity, networking, and data-center build-outs remained robust. Technology performance was driven by semiconductors, optical components, and test equipment holdings.

Infrastructure Semiconductors Data Centers Computing Networking

Defense Spending

Aerospace and defense holdings contributed positively, supported by elevated global defense spending and growing order backlogs. The portfolio is overweight in the industrial sector with holdings in aerospace & defense among other areas.

Aerospace Defense Order Backlogs Global Spending

Critical Minerals

Basic materials positions benefited from supply-demand imbalances and pricing resilience. The portfolio is overweight basic materials with holdings consisting of companies in the rare/critical minerals market selling into aerospace and general industrial industries.

Supply Demand Pricing Rare Earths Industrial

Small Caps

Small cap earnings growth turned positive during 2025 and is expected to stay positive and potentially accelerate in 2026. Small cap stocks continue to trade at attractive valuations relative to large cap stocks, presenting further opportunities combined with an improving fundamental backdrop.

Earnings Growth Valuations Fundamentals Opportunities

2025 Q4

AI

Pershing Square views AI as a major driver of market performance and structural growth. The firm believes megacap companies they own are well-positioned to benefit from AI integration, with Alphabet seen as a clear beneficiary of AI integration and Meta's AI-related spending initiatives viewed as underestimated by the market for long-term upside potential.

Artificial Intelligence Technology Cloud Data Centers Software

Megacaps

The firm has increased exposure to high-quality, higher-growth megacap companies, believing they offer structurally higher growth than most S&P 500 companies at only modestly higher multiples. They view these companies as having sustainable competitive moats and long-term secular growth characteristics that justify higher valuations.

Large Cap Technology Growth Quality Concentration

Earnings

Pershing Square emphasizes that elevated earnings growth has been the primary driver of market returns, with S&P 500 annualized returns of 13% from 2020-2025 driven by 10% EPS growth. They believe most top ten companies have sustainable competitive advantages that will allow for continued high rates of EPS growth.

Growth Fundamentals Valuation Performance

Alternative Asset Managers

Through their Brookfield investment, Pershing Square is positioned in the alternative asset management space, viewing Brookfield as a leading asset-rich alternative asset manager with deep domain expertise positioned to benefit from multi-trillion-dollar AI-related infrastructure investment.

Asset Management Infrastructure Private Equity Real Estate

Insurance

Pershing Square is making a significant investment in the insurance sector through HHH's acquisition of Vantage Group Holdings, a leading specialty insurance and reinsurance company. They view this as an ideal transaction to begin HHH's transformation into a diversified holding company with attractive return profiles.

Insurance Reinsurance Specialty Insurance Financial Services

2025 Q3

AI

Artificial intelligence presents great promise for enhancing business models and improving productivity long-term. In the near-term, the infrastructure needed to support the AI buildout is spurring significant investment and capital expenditures, driving new growth opportunities for innovative companies across technology, industrials, and energy sectors.

Infrastructure Productivity Technology Investment Growth

Infrastructure Spending

The new administration has implemented pro-growth policies including infrastructure spending, manufacturing re-shoring, critical mineral and pharmaceutical production, and defense spending. These policies are expected to support growth across many sectors of the domestic economy and create direct beneficiaries among portfolio companies.

Pro-growth Manufacturing Defense Domestic Policy

Small Caps

Small cap earnings growth is projected to be positive and accelerate throughout 2025 after two years of declines, with 2026 potentially seeing small cap earnings growth outpace large cap. Small caps are prime beneficiaries in past rate-cutting cycles, and the rolling 10-year relative performance versus large caps is in the 6th percentile historically.

Earnings Outperformance Rate Cuts Relative Performance Valuation

Critical Minerals

Critical minerals represents one of the speculative areas that saw significant rallies and material contribution to micro and small cap indices during 3Q. The firm has exposure through holdings in the rare earth materials market and added MP Materials to the portfolio during the quarter.

Rare Earths Speculation Materials Mining Supply Chain

2025 Q2

Infrastructure Spending

Strong forces driving increased infrastructure spending in the US have been gaining momentum for the past couple years and remain intact. The new administration is working to accelerate this trend and NCG is finding companies which are direct beneficiaries.

Infrastructure Government Construction Industrials Policy

Trade Policy

President Trump's Liberation Day tariff announcement on April 2nd created considerable concern for global markets due to the breadth of countries included, level of tariff rates imposed, and short implementation timeframe. However, the administration later put in place a 90-day pause on tariff implementation and started talking about numerous ongoing trade deal negotiations.

Tariffs Trade Policy Global Negotiations

Small Caps

The rolling 10-year annualized return by small vs large stands at -7.3% and is the worst ever going back to 1926. The valuation of the small cap sector relative to large caps is in the 5th percentile historically. Small cap growth stocks participated in the recent up move, but further opportunity exists.

Small Cap Valuation Relative Performance Opportunity Growth

Rates

The Federal Reserve has held rates unchanged so far in 2025 following rate cuts totaling 100bps in the back half of 2024. The Fed remains committed to evaluating incoming data but has recently signaled a willingness to cut rates at some point this year. The market currently expects between two to three 25bp cuts in 2025.

Federal Reserve Interest Rates Monetary Policy Rate Cuts Economic Data

2025 Q1

Growth

NCG emphasizes investing in what they believe are the fastest growing and highest quality companies in America. They maintain focus on companies that can grow revenue and profits at strong rates in any economic and market environment. The firm continues to seek high-quality growth companies selected using original research combined with strong sell discipline.

Growth Companies Revenue Growth Quality Fundamentals Long-term

Infrastructure Spending

The firm believes strong forces driving increased infrastructure spending in the US have been gaining momentum for the past couple years and remain intact. They feel the new administration is working to accelerate this trend and they are finding small companies which are direct beneficiaries of this infrastructure investment theme.

Infrastructure Government Spending Small Companies Beneficiaries Acceleration

2023 Q4

Healthcare

Healthcare holdings drove much of the underperformance across strategies due to investor perception that GLP-1 drugs will reduce medical interventions. Many healthcare companies began recovering in Q4 and the firm believes in long-term growth fundamentals. The firm continues direct research to inform investment decisions in this space.

Biotechnology Medical Devices Diagnostics CRO & CDMO Pharmaceuticals

Data Centers

Worldwide datacenter capacity is poised to continue growing driven by AI, high performance computing, enterprise workloads moving to cloud, and social media proliferation. Vertiv operates in this space providing backup power and thermal management solutions.

Data Centers Cloud AI Infrastructure

Diabetes

The firm invested in both Tandem Diabetes Care for next-generation insulin pumps and DexCom for leading continuous glucose monitoring systems. Both companies serve the growing diabetes care market with innovative technology solutions.

Diabetes Devices Medical Devices Healthcare

Date	Pitch Type	Author	Ticker	Company	Industry	Sub Industry	Bull / Bear	Exchange	Keywords	Action
Dec 31, 2023	Fund Letters	NCG SMID Cap Growth Strategy	MEDP	Medpace Holdings	Health Care	Life Sciences Tools & Services	Bull	NASDAQ	biopharma, Biotech, Clinical trials, contract research organization, Cro, Healthcare services, life sciences, market share gains	Login
Dec 31, 2023	Fund Letters	NCG SMID Cap Growth Strategy	BRZE	Braze	Information Technology	Application Software	Bull	NASDAQ	Cross-Channel, Customer Engagement, high margins, market disruption, Marketing Technology, platform, Real Time, SaaS	Login
Dec 31, 2023	Fund Letters	NCG SMID Cap Growth Strategy	ACGL\|APH\|COO\|CSGP\|DKNG\|GWRE\|IDXX\|IOT\|IT\|LPLA\|MSCI\|MTD\|PCOR\|ROP\|TECH\|VRSK	Guidewire Software	Information Technology	Application Software	Bull	NYSE	cloud migration, Digital transformation, Insurance-software, Legacy Modernization, P&C insurance, platform, recurring revenue, SaaS	Login
Dec 31, 2023	Fund Letters	NCG SMID Cap Growth Strategy	ARGX BB\|DAVA\|DDOG\|GLOB\|ILMN\|LOAR\|MELI\|NET\|NU\|NVDA\|TSM	Endava	Information Technology	IT Consulting & Other Services	Bull	NYSE	banking, Cyclical Recovery, Digital transformation, IT services, Outsourcing, Payments, Technology Consulting, TMT	Login
Dec 31, 2023	Fund Letters	NCG SMID Cap Growth Strategy	NTRA	Natera	Health Care	Biotechnology	Bull	NASDAQ	Cash Flow Inflection, Cell-free DNA, diagnostics, Genetic Testing, MRD Testing, NIPT, Oncology, Precision-medicine	Login
Dec 31, 2023	Fund Letters	NCG SMID Cap Growth Strategy	ASIC\|CWAN\|INSP\|KRMN\|KTOS\|MAC\|MEG\|RH\|WYNN	Clearwater Analytics Holdings	Information Technology	Application Software	Bull	NASDAQ	analytics software, Asset Managers, Insurance, Investment Accounting, market share gains, Post-IPO, SaaS, valuation opportunity	Login
Dec 31, 2023	Fund Letters	NCG SMID Cap Growth Strategy	TNDM	Tandem Diabetes Care	Health Care	Health Care Equipment	Bull	NASDAQ	diabetes care, Healthcare Technology, Insulin Pump, Medical devices, product innovation, product launches, turnaround, valuation recovery	Login
Dec 31, 2023	Fund Letters	NCG SMID Cap Growth Strategy	CSTL	Castle Bioscience	Health Care	Biotechnology	Bull	NASDAQ	Acquisitions, balance sheet strength, Cash Flow Breakeven, Medical Diagnostics, Oncology Testing, Skin Cancer, Under-Penetrated Markets, valuation compression	Login
Dec 31, 2023	Fund Letters	NCG SMID Cap Growth Strategy	MELI\|NFLX\|ORCL\|TCOM\|VRTX\|YUMC	Vertiv Holdings	Information Technology	Electronic Equipment & Instruments	Bull	NYSE	AI, backup power, Cloud computing, Datacenter infrastructure, margin expansion, Pure-Play, secular growth, thermal management	Login
Dec 31, 2023	Fund Letters	NCG SMID Cap Growth Strategy	DXCM	DexCom	Health Care	Health Care Equipment	Bull	NASDAQ	Cgm, Continuous Glucose Monitoring, diabetes care, Geographic Expansion, market leadership, Medical devices, profitability growth, Reimbursement	Login

Date

Pitch Type

Author

Ticker

Company

Industry

Sub Industry

Bull / Bear

Exchange

Keywords

Action

Dec 31, 2023

Fund Letters

NCG SMID Cap Growth Strategy

MEDP

Medpace Holdings

Health Care

Life Sciences Tools & Services

Bull

NASDAQ

biopharma, Biotech, Clinical trials, contract research organization, Cro, Healthcare services, life sciences, market share gains

Dec 31, 2023

Fund Letters

NCG SMID Cap Growth Strategy

BRZE

Braze

Information Technology

Application Software

Bull

NASDAQ

Cross-Channel, Customer Engagement, high margins, market disruption, Marketing Technology, platform, Real Time, SaaS

Dec 31, 2023

Fund Letters

NCG SMID Cap Growth Strategy

Guidewire Software

Information Technology

Application Software

Bull

NYSE

cloud migration, Digital transformation, Insurance-software, Legacy Modernization, P&C insurance, platform, recurring revenue, SaaS

Dec 31, 2023

Fund Letters

NCG SMID Cap Growth Strategy

Endava

Information Technology

IT Consulting & Other Services

Bull

NYSE

banking, Cyclical Recovery, Digital transformation, IT services, Outsourcing, Payments, Technology Consulting, TMT

Dec 31, 2023

Fund Letters

NCG SMID Cap Growth Strategy

NTRA

Natera

Health Care

Biotechnology

Bull

NASDAQ

Cash Flow Inflection, Cell-free DNA, diagnostics, Genetic Testing, MRD Testing, NIPT, Oncology, Precision-medicine

Dec 31, 2023

Fund Letters

NCG SMID Cap Growth Strategy

Clearwater Analytics Holdings

Information Technology

Application Software

Bull

NASDAQ

analytics software, Asset Managers, Insurance, Investment Accounting, market share gains, Post-IPO, SaaS, valuation opportunity

Dec 31, 2023

Fund Letters

NCG SMID Cap Growth Strategy

TNDM

Tandem Diabetes Care

Health Care

Health Care Equipment

Bull

NASDAQ

diabetes care, Healthcare Technology, Insulin Pump, Medical devices, product innovation, product launches, turnaround, valuation recovery

Dec 31, 2023

Fund Letters

NCG SMID Cap Growth Strategy

CSTL

Castle Bioscience

Health Care

Biotechnology

Bull

NASDAQ

Acquisitions, balance sheet strength, Cash Flow Breakeven, Medical Diagnostics, Oncology Testing, Skin Cancer, Under-Penetrated Markets, valuation compression

Dec 31, 2023

Fund Letters

NCG SMID Cap Growth Strategy

Vertiv Holdings

Information Technology

Electronic Equipment & Instruments

Bull

NYSE

AI, backup power, Cloud computing, Datacenter infrastructure, margin expansion, Pure-Play, secular growth, thermal management

Dec 31, 2023

Fund Letters

NCG SMID Cap Growth Strategy

DXCM

DexCom

Health Care

Health Care Equipment

Bull

NASDAQ

Cgm, Continuous Glucose Monitoring, diabetes care, Geographic Expansion, market leadership, Medical devices, profitability growth, Reimbursement

TICKER	COMMENTARY
No ticker commentary found.

TICKER

COMMENTARY

No ticker commentary found.

Ticker	Put/Call	Amount Bought	Shares Bought	% Change	Weight %
No Recent Buys Data

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

Ticker

Put/Call

Amount Sold

Shares Sold

% Change

Weight %

Status

No Recent Sells Data

Industry	Prev Quarter %	Current Quarter %	Change
No industry data available

Industry

Prev Quarter %

Current Quarter %

Change

No industry data available

Investment Summary

Investor Summary

Fund Strategy

FUND PERFORMANCE AS OF 30th June 2026

Investor Letters

Latest Executive Summary:

Executive Summary

Core Thesis

Forward Outlook

Investment Themes

AI

Semiconductors

Small Caps

Defense

Onshoring

Data Centers

Earnings

AI

Defense Spending

Critical Minerals

Small Caps

AI

Megacaps

Earnings

Alternative Asset Managers

Insurance

AI

Infrastructure Spending

Small Caps

Critical Minerals

Infrastructure Spending

Trade Policy

Small Caps

Rates

Growth

Infrastructure Spending

Healthcare

Data Centers

Diabetes

Investor Pitches

Current Portfolio as of ( 30th June 2026 )

Key Risks identified by Manager:

Key catalysts include:

Portfolio Implications

Ticker Commentary

Tom Press Top Holdings

Recent Buys (13F)

Recent Sells (13F)

13F Sector Summary

Portfolio Distribution

Latest 13D & 13G Filings

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NCG SMID Cap Growth Strategy