| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Renaissance Investment Management's Large Cap Growth strategy underperformed in Q4 2025 as markets remained narrow with mega-cap technology stocks driving returns. The portfolio's largest contributors included Alphabet, which released the top-performing AI model Gemini 3 and new cost-effective Tensor Processing Units, Cardinal Health benefiting from pharmaceutical distribution growth, and Applied Materials gaining from AI semiconductor demand and CHIPS Act stimulus. Key detractors included Fiserv, which was sold after revenue recognition irregularities were disclosed, and Netflix, which declined on Brazilian tax issues and an expensive Warner Bros. Discovery acquisition bid. The manager added Lam Research, a semiconductor equipment leader benefiting from AI-driven chip complexity, while selling Royal Caribbean as growth is expected to decelerate. Market valuations have risen dramatically with cap-weighted S&P 500 P/E ratios up 60% versus 30% for equal-weighted over three years. This extreme valuation divergence suggests better relative performance ahead from equal-weighted strategies focusing on reasonably priced growth companies that have lagged mega-cap stocks.
Renaissance favors reasonably priced growth companies that have lagged mega-cap stocks, believing extreme valuation differences between equal-weighted and cap-weighted indices suggest better relative performance ahead from equal-weighted strategies.
The manager expects continued economic growth supported by Fed rate cuts and believes long-term investors will be rewarded with favorable returns from stocks. They anticipate better relative performance from equal-weighted strategies given extreme valuation differences between mega-cap and broader market stocks.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 21 2026 | 2025 Q4 | AMAT, BRO, BSX, CAH, FISV, FIX, GOOGL, LRCX, MSI, NFLX, NTNX, PEGA, RCL, SCHW, TPR, UBER, WM | AI, Equal Weight, growth, large cap, Mega Cap, semiconductors, technology, valuation |
GOOG AMAT NFLX |
AI remains a key driver with mega-cap technology stocks leading market performance. Alphabet released Gemini 3 with performance exceeding expectations, making it the top-performing AI model, and unveiled new Tensor Processing Units for lower-cost AI computations. Applied Materials benefits from strong demand for AI semiconductor chipsets. Semiconductor equipment companies like Lam Research and Applied Materials are benefiting from secular tailwinds including transition to larger chip sizes and increased complexity in chip manufacturing to accommodate AI applications. The CHIPS Act provides federal stimulus supporting the sector. Market valuations have risen significantly with the cap-weighted S&P 500 P/E rising almost 60% over three years versus 30% for equal-weighted. The extreme valuation difference between mega-cap and equal-weighted stocks suggests better relative performance going forward from equal-weighted strategies. |
| Oct 21 2025 | 2025 Q3 | APP, CTAS, FI, FIX, GOOG, IT, TPR, TW | AI, diversification, Large Caps, technology, valuation | - | U.S. large caps hit new highs as tech and AI continue to lead performance. Companies like Alphabet and AppLovin benefit from AI monetization, while investors face valuation concerns as mega-caps dominate indices. The managers emphasize diversification and quality growth selection amid elevated valuations. |
| Jul 21 2025 | 2025 Q2 | AAPL, APH, AVGO, DT, FI, FIX, JBL, TMO | CashFlow, growth, innovation, largecap, moat |
AVGO FIX AAPL FI TMO DT |
Large-cap growth remains attractive through companies with durable competitive advantages and visible cash-flow growth. Market volatility has created entry points in high-quality franchises with long runways. The strategy prioritizes sustainable growth over short-term macro forecasting. |
| Mar 31 2025 | 2025 Q1 | ABBY, AVGO, BJ, CPRT, HON, MAR | - | - | |
| Dec 31 2024 | 2024 Q4 | APP, BAH, HCA, PINS, WEX | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
SemiconductorsRGA initiated a position in Lattice Semiconductor, viewing it as an under-appreciated AI winner with immediate gains and longer-term optionality. Lattice's focus on efficiency and advantages in low-power, small footprint FPGAs position it favorably for AI servers, particularly as the only Post-Quantum Cryptography secure chips on the market. |
FPGAs Security Efficiency AI Infrastructure Programmable | |
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 | |
| 2025 Q3 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
Large Caps |
||
| 2025 Q2 |
Growth |
|
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 21, 2025 | Fund Letters | Michael E. Schroer | AAPL | Apple Inc. | Information Technology | Technology Hardware, Storage & Peripherals | Bear | NASDAQ | AI, Ecosystem, Hardware, Regulation, Smartphones, tariffs | Login |
| Jul 21, 2025 | Fund Letters | Michael E. Schroer | FI | Fiserv, Inc. | Financials | Data Processing & Outsourced Services | Bull | New York Stock Exchange | Fintech, growth, Merchants, Payments, POS, valuation | Login |
| Jul 21, 2025 | Fund Letters | Michael E. Schroer | TMO | Thermo Fisher Scientific Inc. | Health Care | Life Sciences Tools & Services | Bear | New York Stock Exchange | Funding, headwinds, Laboratories, life sciences, tariffs, Tools | Login |
| Jul 21, 2025 | Fund Letters | Michael E. Schroer | DT | Dynatrace, Inc. | Information Technology | Application Software | Bull | New York Stock Exchange | AI, Automation, cloud, Monitoring, observability, Software | Login |
| Jan 21, 2026 | Fund Letters | Michael E. Schroer | GOOG | Alphabet Inc. | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, cloud, Search, semiconductors | Login |
| Jan 21, 2026 | Fund Letters | Michael E. Schroer | AMAT | Applied Materials, Inc. | Information Technology | Semiconductor Equipment | Bull | NASDAQ | AI, CapEx, Chipsact, Equipment, semiconductors | Login |
| Jan 21, 2026 | Fund Letters | Michael E. Schroer | NFLX | Netflix, Inc. | Communication Services | Movies & Entertainment | Bear | NASDAQ | acquisition, Content, Streaming, taxes, valuation | Login |
| Jul 21, 2025 | Fund Letters | Michael E. Schroer | AVGO | Broadcom Inc. | Information Technology | Semiconductors | Bull | NASDAQ | AI, cashflow, growth, hyperscalers, Networking, semiconductors | Login |
| Jul 21, 2025 | Fund Letters | Michael E. Schroer | FIX | Comfort Systems USA, Inc. | Industrials | Construction & Engineering | Bull | New York Stock Exchange | backlog, construction, Contracting, growth, HVAC, Margins | Login |
| TICKER | COMMENTARY |
|---|---|
| AMAT | Top gainers in the Fund this quarter included Applied Materials (+26%). During the quarter, we trimmed the Fund's holding in Applied Materials as it rallied |
| BRO | In 2026, we plan to publish deep dives on Brown & Brown |
| BSX | However, Boston Scientific has fallen sharply following an earnings report on February 4 that missed expectations. |
| CAH | CARDINAL HEALTH INC contributed 0.30% to relative performance |
| FISV | Fiserv is a financial technology company that provides payments and other solutions to merchants and financial institutions. The company's scale, diversification, and ability to compound earnings at a double-digit rate make current valuation attractive. There was a sharp reset in Q3, with the FY25 outlook cut materially after a large miss versus expectations concentrated in the Financial Solutions segment, where both topline growth and profitability disappointed. While 2026 guidance has not been formally introduced, the new CEO framed FY26 as a transition year that resets the long-term growth algorithm to a lower baseline. Once earnings stabilize, we believe Fiserv offers a combination of strong topline growth, margin expansion, and cash generation. |
| FIX | An overweight position in Comfort Systems USA, Inc. (FIX) contributed to performance. The stock rallied after the company reported stronger-than-expected 3Q25 revenue, driven by robust demand for data centers and AI-related infrastructure. |
| 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. |
| LRCX | we believe it is well positioned to become an approved vendor for Lam Research (a supplier of wafer-fabrication equipment) as well |
| MSI | For Motorola Solutions (MSI), underlying results remain quite positive, but a recent acquisition is expected to dilute earnings at a time when tariff headwinds are expected to create near-term margin pressure. |
| NFLX | NFLX was the portfolio's largest detractor in 4Q25 following investor concerns around near-term subscriber growth and rising content spending. While revenue grew approximately 10% year-over-year, management guided to slower net subscriber additions in North America and Europe after recent price increases, and margins were pressured by elevated investment in live sports and international content. |
| NTNX | Nutanix is a provider of a unified cloud platform that simplifies IT by combining compute, storage, networking, and virtualization into a single software-defined solution. In effect, the company allows businesses to run applications across private data centers, public clouds, and edge locations seamlessly. The stock sold off on the back of earnings as the company cut its 2026 revenue and earnings forecast as it navigates complex customer migrations, a choppy macro backdrop and supply chain and OEM partner related uncertainty. |
| RCL | Royal Caribbean uses technology and AI to optimize pricing, packaging, promotions, and other front-end functions. It also is a heavy user of technology onboard, with many apps created for crew members and for customers to streamline the experience as much as possible. The end product is an amazing, fun vacation at great value, but technology is leveraged in many ways to deliver that experience seamlessly to customers. |
| 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. |
| UBER | UBER was a detractor in the fourth quarter following its third-quarter 2025 earnings report, which delivered strong operating performance but was met with a muted market reaction. Gross Bookings and adjusted EBITDA both came in near the high end of management's guidance, driven by accelerating demand across both Mobility and Delivery. However, investor focus shifted to commentary around reduced margin expansion as the company steps up investment in growth initiatives, including autonomous vehicle partnerships, platform innovation, and commerce expansion. |
| 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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