| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.79% | -3.78% | -3.78% |
Osterweis Opportunity Fund returned -3.8% in Q1 2026, slightly underperforming the Russell 2000 Growth Index's -2.8% return amid market headwinds from the Iran war and AI disruption concerns. The fund's core thesis focuses on innovative small cap companies in expanding markets, with particular strength in AI infrastructure beneficiaries. Information Technology holdings outperformed, led by MACOM which saw growth across data centers, defense, and communications. However, software stocks faced pressure from AI disruption fears, with ServiceTitan declining despite its AI-resilient business model. Industrial picks like Modine Manufacturing contributed positively through AI data center HVAC demand. Healthcare holdings struggled except for Twist Bioscience's liquid biopsy positioning. The managers reduced software exposure while maintaining conviction in their innovation-focused approach. Looking ahead, they expect a shift from speculative to fundamental-driven returns in 2026, with their portfolio trading at significant historical discounts providing potential upside through both revenue growth and multiple expansion.
Focus on innovative small cap companies operating in expanding markets, particularly those positioned to benefit from secular growth trends including AI infrastructure buildout, while avoiding speculative stocks in favor of companies with growing revenues and sound fundamentals.
The managers expect the war to continue influencing markets until the outcome becomes clearer, but remain optimistic about near-term prospects. They anticipate a reversal from speculative stocks to fundamentally sound companies in 2026 and believe their portfolio is well positioned due to trading at significant discounts to historical levels.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 25 2026 | 2026 Q1 | CWST, MOD, MTSI, RGEN, TTAN, TWST | AI, growth, healthcare, innovation, semiconductors, small cap, technology |
MTSI TTAN MOD CWST TWST RGEN |
Osterweis small cap growth fund underperformed slightly in Q1 amid Iran war volatility and AI disruption fears. Strong performance from AI infrastructure plays like MACOM and Modine Manufacturing offset software weakness. Managers reduced software exposure while maintaining focus on innovative companies with sound fundamentals, expecting shift from speculation to fundamentals in 2026. |
| Jan 27 2026 | 2025 Q4 | AX, BIRK, CAVA, CECO, CWST, FSV, GH, GWRE, LSCC, LTH, MOD, MTSI, NOVT, SITM, TREX, TTAN, WAY | AI, Biotech, Fintech, growth, healthcare, semiconductors, small cap, technology | - | Osterweis Opportunity Fund outperformed in Q4 despite lagging for the year, as thematic investing dominated over fundamentals. Strong semiconductor and fintech holdings drove performance while avoiding speculative AI and biotech names. Manager expects return to fundamentals-driven markets and sees opportunities across AI, robotics, and healthcare diagnostics secular trends. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI buildout is creating opportunities for smaller innovative hardware companies, particularly in semiconductors and data center infrastructure. However, AI disruption concerns are pressuring software stocks as AI agents threaten existing business models. |
Hardware Semiconductors Software Disruption Agents |
Data CentersData center growth is driving demand for HVAC equipment and cooling solutions. MACOM is experiencing 35-40% growth in data centers, while Modine Manufacturing provides HVAC equipment to AI data centers. |
HVAC Cooling Infrastructure Growth | |
SemiconductorsSmaller innovative hardware companies are now positioned to benefit from AI buildout, historically dominated by hyperscalers. MACOM designs high performance analog and optical semiconductors with growth across data centers, defense, and communications. |
Analog Optical Hardware Innovation | |
DefenseDefense spending is creating opportunities in electronic warfare and radar applications. MACOM is well positioned due to expertise in power and frequency, supporting missile warning and radar programs. |
Electronic Warfare Radar Power Frequency | |
BiotechnologyBiotech sector showed outperformance during the quarter, though this outperformance may not be sustainable. Twist Bioscience is positioned in liquid biopsy and genomic testing, while also serving as outsourced wet lab for AI genomic databases. |
Liquid Biopsy Genomics Testing Databases | |
| 2025 Q4 |
AfricaFund delivered exceptional performance with 67.21% returns in 2025, significantly outperforming the 44.7% benchmark. Portfolio companies show strong fundamentals with forward PE of 6.1x, dividend yield of 8.0%, and expected EPS growth of 19.2%. Manager emphasizes this represents genuine earnings growth rather than multiple expansion. |
Frontier Markets Emerging Markets Equities Value Growth |
LiquidityManager addresses investor concerns about African frontier market liquidity, explaining structural factors affecting trading volumes. Notes that foreign investor participation, local retail and institutional involvement all impact liquidity. Observes trading volumes declining in key markets but sees potential improvement as bull market develops. |
Market Structure Trading Institutional Foreign Investment | |
ValuePortfolio trades at attractive valuations with forward PE of 6.1x and forward dividend yield of 8.0%. Manager emphasizes no valuation multiple expansion over 5+ years, with share price appreciation driven by earnings growth. Portfolio displays high quality metrics with 2026 ROE of 25.1%. |
Valuation Earnings Dividends Quality |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 25, 2026 | Fund Letters | The Osterweis Opportunity Fund | MTSI | MACOM Technology Solutions Holdings Inc | Semiconductors | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | AI infrastructure, Analog, data centers, Defense, Electronic Warfare, growth, LEO satellites, Optical, semiconductors | Login |
| Apr 25, 2026 | Fund Letters | The Osterweis Opportunity Fund | TTAN | ServiceTitan Inc | Software - Application | Software | Bull | NASDAQ | AI Resilient, Automation, Data Moat, HVAC, SaaS, Skilled Trades, subscription revenue, vertical software | Login |
| Apr 25, 2026 | Fund Letters | The Osterweis Opportunity Fund | MOD | Modine Manufacturing Company | Auto Parts | Industrial Machinery | Bull | New York Stock Exchange | AI infrastructure, Cyclical, data centers, divestiture, growth, Heat Transfer, HVAC, thermal management | Login |
| Apr 25, 2026 | Fund Letters | The Osterweis Opportunity Fund | CWST | Casella Waste Systems Inc | Waste Management | Commercial Services & Supplies | Bull | NASDAQ | compounding, defensive, double-digit growth, Northeastern US, operating leverage, Regional, waste management | Login |
| Apr 25, 2026 | Fund Letters | The Osterweis Opportunity Fund | TWST | Twist Bioscience Corporation | Diagnostics & Research | Life Sciences Tools & Services | Bull | NASDAQ | AI Models, biotechnology, Drug Discovery, Genomics, liquid biopsy, secular growth, Synthetic dna, Wet Lab | Login |
| Apr 25, 2026 | Fund Letters | The Osterweis Opportunity Fund | RGEN | Repligen Corporation | Medical Instruments & Supplies | Life Sciences Tools & Services | Bull | NASDAQ | biologics, Bioprocessing, guidance, Life Sciences Tools, manufacturing, Nih, recovery, Sentiment | Login |
| TICKER | COMMENTARY |
|---|---|
| MTSI | Our biggest contributor in IT, also for the second quarter in a row, was MACOM, which designs high performance analog and optical semiconductors and is experiencing growth across its three key end markets. First, in data centers, management projects 35-40% growth with the potential for additional upside. Second, in defense, MACOM is well positioned in electronic warfare due to its expertise in power and frequency, supporting applications such as missile warning and radar programs. Third, in communications, the company is seeing increased activity in low earth orbit (LEO) satellites, with customers such as SpaceX. |
| TTAN | Our biggest detractor in IT was ServiceTitan, the dominant vertical software operating system serving residential and commercial home services trades, including HVAC, plumbing, and electrical. The stock sold off during the quarter as it was caught in the aforementioned AI downdraft. However, we believe ServiceTitan's business is AI-resilient, as its customers are skilled trade businesses that are largely insulated from AI-driven labor disruption. Moreover, with one of the industry's most comprehensive datasets – exceeding $80 billion in transaction volume – we believe ServiceTitan is well positioned to enable AI-driven automation on its platform. With its premium Max tier, fully ramped customers with AI are expected to approximately double monthly subscription revenue. |
| MOD | Our biggest contributor was Modine Manufacturing, which has been growing quickly as it provides HVAC equipment to AI data centers. The company currently generates $1 billion in annual revenue, and it is targeting $2.5 billion in two years. Modine also had a legacy business that was exposed to more cyclical markets such as trucks and off-road vehicles, but it sold that division during the quarter, which caused the stock to rise substantially. |
| CWST | Casella Waste Systems, a regional waste management company operating in the northeastern U.S., was our biggest detractor within Industrials. The stock underperformed primarily because it was overlooked by the market, which was more focused on AI infrastructure and defense stocks during the quarter. In addition, the newly appointed CEO laid out conservative guidance, which disappointed some of the fast-money investors. We continue to be confident in the company's ability to compound revenue at a double-digit pace and grow operating profits even faster. |
| TWST | Our biggest contributor was Twist Bioscience, a maker of synthetic genomic material that is used for both drug discovery and genomic testing. The company is particularly well positioned in the expanding field of liquid biopsy, where we are anticipating substantial secular growth. Additionally, Twist is being used as an outsourced wet lab for other technology companies building genomic databases for their own large language (AI) models. This is a new growth area for the company and was partly responsible for the strong performance in Q1. |
| RGEN | Repligen, a provider of bioprocessing products, detracted most from our relative returns, as enthusiasm for life-sciences tools generally softened during the period. The concerns were driven by a slowdown in purchasing by the National Institutes of Health (NIH), which affected the entire sector. Importantly, Repligen has no exposure to NIH and offered bullish Q1 guidance, so we remain positive about the business. Also, we expect sentiment surrounding life-sciences tools to improve in the second quarter, which should lead to a reversal of the negative momentum. |
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