| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 13.9% | 5.4% | 19.0% |
| 2025 | 2024 |
|---|---|
| 19.0% | 12.0% |
The Parnassus Value Equity Fund returned 5.40% in Q4 2025, outperforming the Russell 1000 Value Index's 3.81%, driven primarily by Information Technology and Industrials holdings benefiting from the broadening AI megatrend. For the full year, the fund returned 19.04% versus the benchmark's 15.91%. The manager maintains a quality-anchored approach with largest overweights in Financials, Health Care, and Information Technology, while avoiding Energy exposure entirely. During the quarter, the team modestly reduced IT sector exposure by taking profits in long-term winners, while adding to Health Care and reducing underweights in Utilities and Industrials through purchases of CMS Energy and Waste Management. The manager expects continued outperformance from value stocks given elevated growth stock valuations, relatively benign economic conditions, and potential for lower rates. The portfolio is positioned to benefit from AI's broadening impact across industries, with high-quality companies possessing the scale to invest in innovation and translate investments into shareholder value over the long term.
The fund pursues strong risk-adjusted returns by owning a concentrated portfolio of high-quality U.S. large cap value stocks that are temporarily out of favor, positioned to benefit from the broadening AI megatrend and supported by attractive valuations relative to growth stocks.
The manager expects the current market environment to continue favoring value stocks, supported by high growth stock valuations, relatively benign economic backdrop, potential for lower rates and stimulative policy levers. AI investments are expected to drive productivity gains and business model innovation across a broader range of industries over time.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 18 2026 | 2025 Q4 | A, AMD, BAC, BALL, BK, CBRE, CMCSA, CMI, CMS, DE, GOOGL, GPN, HD, JPM, MA, MSFT, MU, NICE, NVO, ORCL, REGN, SCHW, SPGI, SYY, WDC, WM | AI, financials, healthcare, large cap, Quality, technology, value |
WDC HD WM |
The broadening AI megatrend continues to fuel demand across sectors, with AI developments boosting returns particularly in Industrials. The manager believes AI has potential to… |
| Oct 15 2025 | 2025 Q3 | ABNB, ABT, BALL, BK, CMI, DE, DHI, HD, NICE, NVO, ORCL, SPGI, SYK, TSM, WDC | Artificial Intelligence, Health Care, Medical Devices, Rate Cuts, Value Investing | - | Parnassus outperformed its benchmark as AI-related holdings such as Oracle and TSMC boosted returns. The fund trimmed IT exposure after strong gains, reallocating into healthcare… |
| Jun 30 2025 | 2025 Q2 | - | earnings durability, opportunity, quality businesses, valuation, value | - | The letter argues that macro uncertainty and tariff-driven volatility have created attractive entry points in high-quality value stocks. Management emphasizes buying temporarily out-of-favor companies with… |
| Apr 14 2025 | 2025 Q1 | A, ALGN, AMD, AMZN, AVGO, BIO, CI, DE, GILD, GOOG, JPM, PGR, ROST, VZ | - | - | - |
| Dec 31 2024 | 2024 Q4 | ABNB, ALGN, AMAT, AMZN, AVGO, AZN, BALL, BAX, BIIB, BK, DHI, DIS, FIS, GOOG, GPN, INTL, MU, NICE, NTR, NVO, ORCL, PGR, SCHW, TSM, V | - | - | - |
| Oct 28 2024 | 2024 Q3 | AMZN, AXP, BIIB, BK, CBRE, CHTR, DHI, GOOG, INTC, MU, ORCL, PGR, SCHW, UNH | - | - | - |
| Jul 12 2024 | 2024 Q2 | ALGN, AVGO, BAX, BEPC, CSCO, GOOG, GPN, INTC, MU, NICE IT, ORCL, TSM | - | - | - |
| Apr 27 2024 | 2024 Q1 | BIIB, CMI, FIS, GILD, INTC, MU, PGR, SPGI | - | - | - |
| 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 |
Data CentersEMCOR Group was initiated as a new position, viewed as a critical contractor enabling multi-year investment cycles across data centers, semiconductor fabrication, electrification, and broader infrastructure modernization. Its decentralized, cash-generative model, recurring service base, and exposure to structural growth drivers create a profile viewed as more durable than a typical cyclical contractor framework. |
Infrastructure Electrification Recurring Revenue Growth Drivers | |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 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 |
Health Care |
||
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic | |
| 2025 Q2 |
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 18, 2026 | Fund Letters | Billy Hwan | WDC | Western Digital Corporation | Information Technology | Technology Hardware Storage & Peripherals | Bull | NASDAQ | AI, datacenters, Margins, Pricing, Storage | Login |
| Jan 18, 2026 | Fund Letters | Billy Hwan | HD | The Home Depot, Inc. | Consumer Discretionary | Home Improvement Retail | Bear | New York Stock Exchange | Cyclicality, Demand, home improvement, Housing, retail | Login |
| Jan 18, 2026 | Fund Letters | Billy Hwan | WM | Waste Management, Inc. | Industrials | Commercial Services & Supplies | Bull | New York Stock Exchange | Defensiveness, Pricing power, Recycling, synergies, waste | Login |
| TICKER | COMMENTARY |
|---|---|
| A | Agilent Technologies, a supplier of equipment for life science research, was under pressure as recent cuts to grants from the National Institutes of Health impacted its near-term outlook. We traded Agilent for ThermoFisher earlier in the year. |
| 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. |
| BAC | BAC, JNJ, JPM, and XOM were held in Miller/Howard portfolios as of December 31, 2025. |
| BALL | Ball shares were pressured by a combination of industry headwinds and operational challenges. We sold the holding during the quarter to focus on areas where our conviction is higher. |
| BK | Bank of New York Mellon, the largest financial custodian in the world, advanced amid strong earnings results. America's oldest bank is an early leader in the adoption of AI, with a multiyear partnership with OpenAI. |
| CBRE | CBRE Group Inc. was an excellent investment for us. As the world's largest commercial real estate services company, CBRE has a market-leading position in leasing and property sales brokerage. We purchased shares in June 2022 at peak concern regarding the future of the office due to remote work, rising interest rates, and a weakening economy. CBRE's value grew over the course of our ownership, but its share price rose faster, and we reallocated capital to more discounted businesses. |
| CMCSA | Within the portfolio, stocks like AutoZone, Comcast, and Zoetis were all punished for having perceived headwinds to already lowered expectations for growth. |
| CMI | Cummins rallied after the engines and industrial equipment maker reported robust third-quarter sales results due to strong growth in the distribution and power systems segment driven by data center demand. |
| CMS | CMS Energy is a stable, well-managed utility with a strong track record of consistent growth, supported by a highly constructive regulatory environment in Michigan. The company's current capital investment plan and other initiatives are expected to modestly accelerate earnings growth. |
| DE | Deere treaded water as the market wanted AI momentum and not our names. |
| 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. |
| GPN | Global Payments shares fell as the company announced the acquisition of payment processing company Worldpay. Due to reduced conviction in the investment thesis, we sold our position earlier in the year. |
| HD | Conversely, our biggest detractors this quarter were DR Horton (DHI), Lennar Corp (LEN), Home Depot (HD). |
| JPM | JPMorgan (JPM) has identified 42 AI-related stocks in the S&P 500, which today represent 45% of the index's market cap. They estimate that these stocks have accounted for 78% of S&P 500 returns, 66% of earnings growth, and 71% of capital spending growth since ChatGPT launched in November 2022. As it relates to the impact on the U.S. economy, JPM estimates tech sector capital spending contributed 40%-45% of U.S. GDP growth through the first 9 months of the year, up from less than 5% during the same period in 2023. |
| MA | The enduring appeal of card payments is their universality. Consumers trust that Visa and Mastercard will be accepted globally. After more than 20 years of litigation, Visa and Mastercard agreed to yet another settlement that gives merchants greater flexibility |
| 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. |
| MU | Core gains were led by investments in the Technology sector including Micron |
| NICE | NICE, a software company providing contact center solutions, lost investor confidence due to concerns over AI disruption. However, we believe that the company should see AI transform its business model and drive long-term growth. |
| NVO | I sold Novo Nordisk (NVO) after a very brief period of ownership due to what appeared to be a disadvantageous competitive situation after further diligence. Eli Lilly (LLY) is much more highly valued than NVO, which initially attracted me to NVO as a value investor, but further investigation has revealed LLY has a superior product (for now). While NVO has been first to market with an oral GLP-1, it is likely only a matter of time before LLY brings a similar option to market. NVO may take an aggressive approach to pricing to access more customers and compete with LLY, but LLY's advantage is likely to persist and I felt there were better alternatives for the capital. |
| ORCL | Investor enthusiasm for Oracle's stock in calendar year 2025 was initially driven by several multi-billion-dollar contracts it signed with leading AI companies, including OpenAI and Meta. However, in Q4 sentiment for ORCL's growth prospects shifted to skepticism, as investors began to scrutinize the return profile of the substantial capital investments required to support the approximately $500 billion of contracts signed by Oracle. Given the widening range of potential outcomes associated with Oracle's elevated capital needs, we reduced our position in ORCL during Q4. |
| REGN | Performance was driven by strength in large-cap longs, specifically Regeneron |
| SCHW | We also added to The Charles Schwab Corporation, which is benefiting from positive earnings revisions, expanding margins, and higher capital returns after having repaid nearly all of its high cost funding. |
| SPGI | Leading rating agency and data provider S&P Global Inc. contributed to performance. Shares rebounded from a pullback in September that stemmed from a competitor's cautious commentary around market demand and margins. S&P Global alleviated these concerns by delivering strong third quarter results and raising its full-year financial guidance. |
| SYY | Sysco shares dropped after management's conservative outlook for fiscal year 2026 due to continued macro uncertainties and uneven demand in the 'food-away-from-home' sector. |
| WDC | The fund maintained an overweight position in technology hardware, storage & peripherals company Western Digital. Early in 2025, the company announced a strategic spin-off separating its flash division as SanDisk, while Western Digital focused primarily on the hard disk drive (HDD) market, allowing the company to be valued as a standalone HDD leader. The continued surge in AI infrastructure demand massively boosted the demand for high-capacity HDDs, and Western Digital benefited from an increase in purchase orders from major hyperscalers extending into 2026 and even 2027. |
| WM | Waste Management (WM) is the largest integrated waste collection, transfer, and disposal company in North America. Its large active weight in the Fund reflects our confidence in the business. WM's unmatched landfill and transfer station network creates formidable barriers to entry, supporting durable pricing power and steady cash flows. We view the company as uniquely positioned to enhance returns through landfill gas capture and automation investments that improve efficiency, margins, and long-term profitability. |
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