| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.0% | 5.9% | 6.2% |
| 2025 | 2024 |
|---|---|
| 4.3% | 29.1% |
Wedgewood Partners reported a challenging fourth quarter 2025, with the composite declining -1.8% versus the S&P 500's +2.7% gain, resulting in full-year underperformance of 4.3% versus 17.9% for the index. The manager describes 2025 as their worst relative calendar year since 1993, attributing underperformance to poor stock selection, valuation pauses in previous strong performers, and structural underweighting to AI-technology stocks. Key contributors included Alphabet and Taiwan Semiconductor Manufacturing, while Meta Platforms, Motorola Solutions, and United Rentals detracted. The firm initiated positions in Amazon and Chubb while trimming several holdings. Looking ahead, the manager expresses concern about excessive market valuations, noting over 30% of US market capitalization trades above 10x sales reminiscent of the tech bubble. Despite near-term challenges, they believe their portfolio's superior fundamentals and attractive valuation relative to growth indices position it well for potential outperformance in 2026, particularly if market conditions favor quality over speculation.
Wedgewood Partners maintains a disciplined approach to quality growth investing, focusing on companies with superior fundamentals, strong competitive positions, and reasonable valuations, while remaining patient during periods of market speculation and excessive valuations.
The manager expects greater stock market volatility in 2026 and is patiently waiting for better prices. Despite the challenging 2025 performance, they believe the current portfolio's superior fundamentals and attractive valuation relative to growth indices position it well for a performance reversal in 2026.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 14 2026 | 2025 Q4 | AAPL, AMZN, BKNG, CB, CDW, CPRT, EW, GOOGL, META, MSI, ODFL, ORLY, POOL, PYPL, SPGI, TSCO, TSM, UNH, URI, V | AI, growth, large cap, Portfolio Management, Quality, technology, valuation |
AMZN CB GOOG TSM AAPL ODFL EW META MSI URI TSCO PYPL |
AI continues to drive significant revenue growth across portfolio companies. Google Cloud processes 1.3 quadrillion AI tokens per month, more than double from just a… |
| Oct 14 2025 | 2025 Q3 | BKNG, CDW, CPRT, GOOG, META, MSFT, PYPL, TSM | Artificial Intelligence, Data centers, energy, Leverage, semiconductors |
GOOGL US PYPL US META US MSFT US |
Wedgewood warns of an unsustainable AI capital spending boom reminiscent of past tech bubbles. It highlights mounting corporate leverage and grid strain from AI data… |
| Jul 14 2025 | 2025 Q2 | - | AI, earnings, growth, large cap, Pricing Power | - | The letter centers on owning dominant large-cap growth companies benefiting from scale, pricing power, and technology adoption. AI-driven productivity and margin expansion are highlighted as… |
| Apr 14 2025 | 2025 Q1 | GOOG, ORLY, PYPL, URI, V | - | - | - |
| Jan 15 2025 | 2024 Q4 | CDW, EW, NVDA, ORLY, TPL, TSCO, TSM | - | - | - |
| Oct 16 2024 | 2024 Q3 | AAPL, CDW, CPRT, EW, GOOG, META, MSFT, MSI, POWL, PYPL, UNH | - | - | - |
| Jul 15 2024 | 2024 Q2 | AAPL, BKNG, CDW, GOOG, MSI, ODFL, POOL, PYPL, TSM, V | - | - | - |
| Apr 15 2024 | 2024 Q1 | BKNG, CDW, CPRT, META, POOL, PYPL, SPGI, V | - | - | - |
| Jan 13 2024 | 2023 Q4 | AAPL, EW, GOOG, META, MSFT, MSI, ODFL, ORLY, PYPL, TPL, TSCO, TSM, UHG | - | - | - |
| Dec 10 2023 | 2023 Q3 | AAPL, COP, DHR, EW, GOOG, MSI, ORLY, PYPL, TSM | - | - | - |
| Jul 14 2023 | 2023 Q2 | AAPL, CDW, CPRT, GOOG, META, MSFT, PYPL, TPL, TSCO | - | - | - |
| Apr 20 2023 | 2023 Q1 | AAPL, BKNG, FRC, GOOG, META, PGR, SPGI, TPL, TSM, UNH | - | - | - |
| Jan 19 2023 | 2022 Q4 | AAPL, CDW, EW, GOOG, META, MSI, PYPL, TPL, TSCO, V | - | - | - |
| Oct 10 2022 | 2022 Q3 | AAPL, CPRT, EW, FB2A, GOOG, MSI, PYPL, TPL, TSM, V | - | - | - |
| 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 |
CloudAmazon's positioning to benefit from both infrastructure and application layers of AI is highlighted. The company's logistical prowess represents one of the foremost moats in business and will be enhanced with AI through better orchestration of logistics assets and buildout of more sophisticated robotics. |
Infrastructure Logistics Automation Efficiency Coordination | |
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 | |
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 |
AI Capex Cycle |
|
Energy Demand |
||
Semiconductor Supply Chain |
||
| 2025 Q2 |
Growth |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 14, 2026 | Fund Letters | David A. Rolfe | CB | Chubb Limited | Financials | Property & Casualty Insurance | Bull | New York Stock Exchange | compounding, Insurance, premiums, profitability, underwriting | Login |
| Jan 14, 2026 | Fund Letters | David A. Rolfe | GOOG | Alphabet Inc. | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, cloud, scale, Search | Login |
| Jan 14, 2026 | Fund Letters | David A. Rolfe | TSM | Taiwan Semiconductor Manufacturing Company Ltd. | Information Technology | Semiconductors | Bull | New York Stock Exchange | AI, Foundry, HPC, Pricing, semiconductors | Login |
| Jan 14, 2026 | Fund Letters | David A. Rolfe | AAPL | Apple Inc. | Information Technology | Technology Hardware, Storage & Peripherals | Bull | NASDAQ | Ecosystem, Hardware, Margins, services, Upgrades | Login |
| Jan 14, 2026 | Fund Letters | David A. Rolfe | ODFL | Old Dominion Freight Line, Inc. | Industrials | Cargo Ground Transportation | Bull | NASDAQ | Cyclicality, efficiency, Freight, Logistics, Pricing | Login |
| Jan 14, 2026 | Fund Letters | David A. Rolfe | EW | Edwards Lifesciences Corp. | Health Care | Health Care Equipment | Bull | New York Stock Exchange | Cardiology, growth, innovation, Margins, Medical devices | Login |
| Jan 14, 2026 | Fund Letters | David A. Rolfe | META | Meta Platforms Inc. | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, Data, Engagement, social media | Login |
| Jan 14, 2026 | Fund Letters | David A. Rolfe | MSI | Motorola Solutions Inc. | Information Technology | Communications Equipment | Bull | New York Stock Exchange | Communications, growth, Public safety, Software, valuation | Login |
| Jan 14, 2026 | Fund Letters | David A. Rolfe | URI | United Rentals Inc. | Industrials | Trading Companies & Distributors | Bull | New York Stock Exchange | construction, Cyclicality, infrastructure, Rentals, scale | Login |
| Jan 14, 2026 | Fund Letters | David A. Rolfe | TSCO | Tractor Supply Company | Consumer Discretionary | Specialty Retail | Bull | NASDAQ | Loyalty, Margins, recovery, retail, Rural | Login |
| Jan 14, 2026 | Fund Letters | David A. Rolfe | PYPL | PayPal Holdings Inc. | Financials | Transaction & Payment Processing Services | Bear | NASDAQ | Competition, Execution, Margins, Payments, Volumes | Login |
| Oct 14, 2025 | Fund Letters | David A. Rolfe | GOOGL US | Alphabet Inc | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, cashflow, cloud, growth, infrastructure, Search, technology | Login |
| Oct 14, 2025 | Fund Letters | David A. Rolfe | PYPL US | PayPal Holdings Inc | Financials | Financial Technology | Bull | NASDAQ | ecommerce, Fintech, growth, Payments, stablecoin, valuation, Venmo | Login |
| Oct 14, 2025 | Fund Letters | David A. Rolfe | META US | Meta Platforms Inc | Communication Services | Social Media & Networking | Bull | NASDAQ | AI, cashflow, datacenter, infrastructure, innovation, social media, Software | Login |
| Oct 14, 2025 | Fund Letters | David A. Rolfe | MSFT US | Microsoft Corp | Information Technology | Systems Software | Bull | NASDAQ | AI, CapEx, cashflow, cloud, data centers, growth, Software | Login |
| Jan 14, 2026 | Fund Letters | David A. Rolfe | AMZN | Amazon.com, Inc. | Consumer Discretionary | Broadline Retail | Bull | NASDAQ | advertising, cloud, ecommerce, Margins, valuation | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | Apple Inc. represents 1.6% of company owned with cost basis of $6,255 million and market value of $61,962 million, providing $280 million in 2025 dividends. |
| AMZN | One company we own that we think has unique positioning to benefit from both the infrastructure and application layers is Amazon. Amazon's logistical prowess is one of the foremost moats in business today and it can and will be enhanced with AI. The company will do this in multiple ways, with better orchestration of its logistics assets and underlying cargo, as well as the buildout of more capable, sophisticated and robust robotics. Amazon is singularly well positioned to dominate the coordination layer, with AI's help, across its entire logistics network. |
| BKNG | You may remember that we owned Booking during the pandemic. It is the world's leading online travel agency and a business we have admired for a long time. The company benefits from powerful network effects—more hotels attract more travelers, and vice versa—creating a moat that is incredibly difficult for competitors to cross. It is highly profitable, capital-light, and generates significant free cash flow. We were happy to re-enter this high-quality compounder at a valuation that offers a compelling margin of safety. |
| CB | Chubb is one of our core property & casualty insurance holdings. It is well-diversified across products and geographies. The company has consistently generated returns on equity comfortably ahead of the industry owing to a combination of running advantaged lines of business with a disciplined underwriting and operating culture. Pricing trends in the insurance markets have generally been strong in recent years, and consequently Chubb has been earning returns on tangible equity in the low 20s. While competitive forces may in time push that back toward a normalized level a few points lower, Chubb we believe would still be valued at 10–11x earnings looking out a few years. |
| CDW | CDW was the second-worst performer. The IT industry continued to suffer from the pull forward of spending during COVID; however, we saw some momentum with the Windows 11 refresh and all of CDW's business lines had solid growth except for education. Despite this, overall earnings growth only exhibited modest improvement. |
| CPRT | we recently trimmed some of our mega-cap tech holdings and other outperformers and used the proceeds to buy more of our underperforming holdings such as Copart, Inc. |
| 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. |
| META | On January 9, Meta Platforms unveiled a new agreement with Vistra—the largest generator of competitive electricity in the United States—as well as with TerraPower and Oklo. The announcement builds on Meta's agreement last year with Constellation Energy and positions the company to become one of the largest corporate purchasers of nuclear-generated electricity in the United States. |
| 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. |
| ODFL | Rotated exposure from Old Dominion Freight Line, a leading less-than-truckload (LTL) carrier. |
| ORLY | Weakest performers included O'Reilly Automotive (-15%) |
| POOL | Pool Corp. distributes swimming pool supplies, equipment, and accessories. The industry remains range-bound, with limited catalysts and sluggish trends in new-home sales and construction. We liquidated the position and redeployed the proceeds into other areas with better growth prospects. Pool sank by -25% while held in the quarter. |
| PYPL | By looking at their Rnancials, FactSet, PayPal, Adobe, and Salesforce seem to be doing Rne. The market, however, is reading subdued revenue growth as a sign of increased competition on their core oSerings. These companies' outlooks look more di'cult than their past. |
| 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. |
| TSCO | Tractor Supply, a US based speciality retailer serving rural and recreational customers, was one of the most significant detractors for the month. With no material company-specific news, the underperformance likely reflects a current preference for some of the lower quality and more cyclical areas within the Consumer Discretionary sector. Additionally, the mild winter and absence of a major storm season suggests Q4 results may track toward the lower end of guidance. Despite this, our long-term conviction remains intact, with direct sales initiatives and accelerated store rollouts expected to support top-line growth in 2026. |
| TSM | TSMC was a top contributor during the quarter, driven by robust demand for advanced semiconductor manufacturing and improved gross margins as AI continues to grow strong and the non-AI segment showed signs of recovery. Management raised its revenue growth guidance to the mid-30% range, and given continued strength in demand, AI-related growth targets are expected to move above the current mid-40% level. |
| UNH | We also added back a full position in UnitedHealth |
| URI | Cadence, Linde, United Rentals, and Progressive rounded out the top-five detractors in the quarter. |
| V | There were companies there such as Visa, which we own, as well as many we do not, and which would not likely be appropriate for this mandate. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| Industry | Prev Quarter % | Current Quarter % | Change |
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