| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 16.6% | -1.4% | 17.9% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 17.9% | 20.5% | 34.4% | -33.4% | 21.9% | 62.5% |
NZS Growth Equity delivered -1.35% net returns in Q4 2025 versus +3.36% for the benchmark, but achieved +17.94% for the full year. Top contributors included Alphabet, Danaher, Lam Research, Taiwan Semiconductor, and ASML, while Fiserv was the primary detractor after management revealed systematic over-earning under prior leadership. The portfolio began reallocating away from IT in Q3 as AI euphoria returned and multiples recovered, finding opportunities in left-behind quality growth companies. NZS believes the market has created excessive fear around AI displacing software companies, arguing that systems of record and vertical market software are well-positioned to adapt through AI integration rather than be disrupted. The firm maintains skeptical optimism about near-term AI developments while being excited about longer-term innovation potential. Portfolio positioning remains overweight IT but at reduced levels, with new positions in insurance brokerage and Polish retail. The strategy continues focusing on adaptable businesses creating non-zero-sum outcomes globally.
NZS focuses on adaptable businesses creating non-zero-sum outcomes in their ecosystems, with current emphasis on software systems of record and vertical market platforms that can integrate AI rather than be displaced by it.
NZS remains skeptically optimistic for the near future as AI platform wars shake out, while being giddy for the explosion of new ideas and companies that AI platforms will enable over the longer time horizon. They are energized by the opportunity set for the portfolio entering 2026.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 26 2026 | 2025 Q4 | AJG, APH, ASML, CDNS, CMG, CSU.TO, DHR, DNP.WA, FI, FND, FROG, GOOGL, HRTX, ISRG, LIN, LRCX, MNDY, PGR, ROP, TSM, URI | AI, growth, positioning, semiconductors, software, technology, valuation |
GOOGL DHR FISV LRCX TSM ISRG |
The market created a wall of worry that AI would displace existing software companies, but NZS believes software systems of record are well positioned to… |
| Oct 20 2025 | 2025 Q3 | SAIL | Artificial Intelligence, cybersecurity, Identity Governance, productivity, software |
SAIL SAIL |
The fund explores the widening range of AI outcomes, focusing on resilient companies that avoid speculative hype while enabling long-term productivity gains. Portfolio adjustments include… |
| Jul 18 2025 | 2025 Q2 | - | asymmetry, optionality, Resilience, secular growth, volatility | TOST | The letter presents a portfolio framework built around resilience and asymmetry in a volatile, complex adaptive system. Management divides capital between high-quality compounders and optionality-driven… |
| Apr 24 2025 | 2025 Q1 | HEI | - | - | - |
| Jan 23 2025 | 2024 Q4 | ASML, MCHP | - | - | - |
| Oct 10 2023 | 2024 Q3 | AMT, ROP | - | - | - |
| Oct 7 2023 | 2024 Q2 | NVDA, TSM | - | - | - |
| Jan 16 2024 | 2023 Q4 | TT | - | - | - |
| Nov 1 2023 | 2023 Q3 | - | - | - | - |
| Aug 1 2023 | 2023 Q2 | - | - | - | - |
| Apr 27 2023 | 2023 Q1 | - | - | - | - |
| Mar 2 2023 | 2022 Q4 | - | - | - | - |
| Nov 10 2022 | 2022 Q3 | - | - | - | - |
| Nov 7 2022 | 2022 Q2 | - | - | - | - |
| Apr 18 2022 | 2022 Q1 | - | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
CloudCloud computing remains a core portfolio theme with strong positioning in hyperscale providers and infrastructure companies. Microsoft Azure showed 39% growth while Google Cloud exceeded 30% growth, both supported by AI workload adoption. The fund sees continued multi-year demand for cloud infrastructure and services as enterprises accelerate digital transformation. |
Azure Infrastructure Hyperscale Enterprise Growth | |
SemiconductorsMACOM Technology Solutions rose nearly +40% as the company experienced broad-based demand, similar to many semiconductor companies in 2025. The team exited Astera Labs following industry conference presentations that suggested emerging competitive risks and concerns over single customer concentration, while initiating a position in Credo Technology for AI-connectivity exposure. |
Demand Competition Connectivity Customer Concentration | |
| 2025 Q3 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
CybersecurityCybersecurity companies are using AI in core algorithms to better identify anomalies and block malicious traffic. CrowdStrike is seeing reacceleration in growth with new Falcon Flex offering, while Netskope continues gaining SASE market share with strong competitive win rates. |
Security AI Detection Enterprise Cloud Protection | |
Technology |
||
| 2025 Q2 |
Asymmetry |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 18, 2025 | Fund Letters | Brad Slingerlend | TOST | Toast, Inc. | Information Technology | Internet Services & Infrastructure | Bull | New York Stock Exchange | network effects, Payments, Restaurants, SaaS, Software, vertical market | Login |
| Jan 26, 2026 | Fund Letters | Brad Slingerlend | GOOGL | Alphabet Inc. | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, cloud, Platforms, Search | Login |
| Jan 26, 2026 | Fund Letters | Brad Slingerlend | DHR | Danaher Corp. | Health Care | Life Sciences Tools & Services | Bull | New York Stock Exchange | diagnostics, life sciences, Margins, recovery, recurring revenue | Login |
| Jan 26, 2026 | Fund Letters | Brad Slingerlend | FISV | Fiserv Inc. | Information Technology | Transaction & Payment Processing Services | Bear | New York Stock Exchange | durability, exit, Fintech, Management Reset, Payments | Login |
| Jan 26, 2026 | Fund Letters | Brad Slingerlend | LRCX | Lam Research Corp. | Information Technology | Semiconductor Equipment | Bull | NASDAQ | AI, CapEx, Complexity, Margins, semiconductor equipment | Login |
| Jan 26, 2026 | Fund Letters | Brad Slingerlend | TSM | Taiwan Semiconductor Manufacturing Co. | Information Technology | Semiconductors | Bull | New York Stock Exchange | advanced nodes, AI, Foundry, scale, semiconductors | Login |
| Jan 26, 2026 | Fund Letters | Brad Slingerlend | ISRG | Intuitive Surgical Inc. | Health Care | Health Care Equipment | Bull | NASDAQ | Medtech, Procedures, recurring revenue, robotics, Surgery | Login |
| Oct 20, 2025 | Fund Letters | Brad Slingerlend | SAIL | SailPoint Technologies Holdings Inc. | Information Technology | Cybersecurity | Bull | NYSE | AI, cybersecurity, Enterprise adoption, Identity, SaaS, TAM, Zero trust | Login |
| Oct 20, 2025 | Fund Letters | Brad Slingerlend | SAIL | SailPoint Technologies Holdings Inc. | Information Technology | Cybersecurity | Bull | NYSE | AI, cybersecurity, Enterprise adoption, Identity, SaaS, TAM, Zero trust | Login |
| TICKER | COMMENTARY |
|---|---|
| AJG | Arthur J Gallagher faced continued negative sentiment around insurance-related companies, with shares underperforming due to a combination of investors moving away from typically more defensive stocks and company-specific factors. The company's earnings were impacted by accounting noise from the AssuredPartners acquisition and a miss on brokerage organic growth, which led to questions about growth deceleration. |
| APH | We trimmed Amphenol Corp. |
| ASML | ASML, TSMC, and Arista Networks are key players in the AI build out supply chain. |
| CDNS | Cadence, Linde, United Rentals, and Progressive rounded out the top-five detractors in the quarter. |
| CMG | The top-five detractors from returns were Fiserv, Chipotle, Constellation Software, Roper, and Floor & Décor. In the quarter, we exited Fiserv, Chipotle, and monday.com. |
| 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. |
| DHR | After lagging through the first three quarters of 2025, Danaher's stock rebounded during Q4 as bioprocessing, life science, and diagnostics demand continued to recover from a cyclical trough. On the 3Q25 call, management established conservative 2026 growth expectations. Revenue is expected to continue to lag long-term trends at 3-6% but improve throughout the year. |
| DNP.WA | In the quarter, we added to several names in the portfolio that would loosely fit this description – Danaher and Linde to name two – and introduced new positions with Arthur J Gallagher, an insurance broker, and Dino Polska, a fast-growing Polish grocer. |
| FI | Notable detractors from performance came from Fiserv (-43bps absolute and -39bps relative) |
| FND | Floor & Decor (FND) is a business I've wanted to own shares in for some time. They are the leading warehouse-style flooring store with higher in-stock inventory selection and lower prices than scaled competitors, and have been taking market share for years if not decades. In my opinion, they are following the Home Depot model to disrupt a profitable subcategory of home improvement. I still believe the current purchase price is not obviously cheap on near-term earnings, but the purchase price does reflect an attractive valuation on long-term margins. The company's current EBIT margins are about 30% below their long-term pre-COVID levels, and I believe EBIT margins should continue to scale towards the low-to-mid-teens as the company builds out its store base. Current sales per store are depressed by a post-COVID hangover and higher interest rates which have depressed existing home sales, a key catalyst for renovation activity. Higher sales per store will lead directly to higher store-level margins, which flow nicely through to EBIT margins. I believe, with a more favorable existing home sales macro backdrop, that sales can grow at double digits with significant flow-through to the bottom line. It would not surprise me to look a couple years out and see the company generating $6.5B of sales at 7.0% net margins, which would mean the company is trading at 16x that admittedly uncertain (due to macro uncertainty) future earnings with nearly a decade of future store growth and comp growth. I see the company generating nearly $12 earnings per share 10 years from now, when it's store growth plan should be essentially complete. |
| FROG | Lastly was JFrog Ltd., the portfolio's strongest performer this quarter. JFrog manages the software supply chain and enables organizations to securely deliver software updates across their enterprises. Demand for security increased following the recent NPM supply chain attack. JFrog's security add-on—which secures open-source packages before organizations onboard them—has seen significant pipeline growth, driving a 32% rally in its shares. |
| 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. |
| HRTX | Heartflow, Inc. is a medical device company providing an AI-powered engine to diagnose heart disease. Heart disease is responsible for 1 in 5 deaths in the U.S., and every 40 seconds someone has a heart attack. There is an urgent need to quickly and accurately catch this disease before it reaches this stage. Heartflow's solution provides a minimally invasive way to catch blockages in the heart vessels, reducing both false negatives and false positives relative to standard of care today. The company has a strong competitive moat, with a repository of 110 million images supplemented by human-aided training that has taken over 10 years to build. |
| ISRG | ISRG shares appreciated in the fourth quarter after the company delivered strong Q3 results highlighting continued procedure growth and accelerating system placements. Procedure volumes rose in the mid-teens globally, with notable strength in general surgery and urology, while recurring instrument and accessory revenue grew faster than expectations. Management also reported that the early rollout of its next-generation robotic platform was tracking ahead of schedule, with utilization metrics trending positively across beta sites. |
| LIN | While the company remains a high-quality global leader in industrial gases, shares of Linde plc declined nearly 10% in Q4 due to a persistent industrial gas volume recession, softer guidance and global macroeconomic concerns. From a macro standpoint, the company continues to struggle with negative base volumes in its core industrial segments. |
| LRCX | we believe it is well positioned to become an approved vendor for Lam Research (a supplier of wafer-fabrication equipment) as well |
| MNDY | Monday.com detracted from relative quarterly performance |
| PGR | Cadence, Linde, United Rentals, and Progressive rounded out the top-five detractors in the quarter. |
| ROP | After a decade-long partnership with Roper Technologies, we have made a strategic decision to exit our position. Our decision to sell was based on three factors. Firstly, Roper's organic growth rates have begun to lag its pure-play software peers. Secondly, we believe many of these businesses are approaching market saturation, which limits their future growth prospects. Lastly, the valuation no longer provides an attractive margin of safety given the first two challenges. |
| TSM | ASML, TSMC, and Arista Networks are key players in the AI build out supply chain. |
| URI | Cadence, Linde, United Rentals, and Progressive rounded out the top-five detractors in the quarter. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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