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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Mairs & Power – Power Fund 2023 Q2 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q2 2023 Letter Analysis

Mairs & Power – Power Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Mairs & Power – Power Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

YTD+18.82%

Annualized+11.33%

Positioning StanceConstructive

Market CapLarge Cap

GeographyUS

Digest Analysis

Quick Take

"Mairs & Power Growth Fund outperformed on strong technology stock selection, particularly Nvidia's 189% AI-driven surge. Strategic positioning in tech during last year's selloff paid off, though banking holdings faced headwinds."

Executive Summary

The Mairs & Power Growth Fund delivered strong performance in the first half of 2023, returning 18.82% versus 16.89% for the S&P 500, driven primarily by excellent stock selection. The fund benefited significantly from its technology holdings, particularly Nvidia which surged 189% on AI-driven demand, along with strong performance from Amazon and Microsoft. The managers had strategically built up their technology weighting during last year's selloff, positioning them well for this year's AI-driven rally. However, the fund faced headwinds from banking holdings including US Bank and Charles Schwab, which were caught up in the regional banking crisis. Looking forward, the managers maintain a positive long-term outlook while acknowledging near-term uncertainty from mixed economic signals. They continue to favor technology companies benefiting from AI transformation while opportunistically adding to undervalued positions in traditional sectors like financials, healthcare, and utilities. The concentrated approach on companies with durable competitive advantages at reasonable valuations remains their core strategy.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

68%

CautiousHigh

Moderate (68%)

The fund demonstrates moderate-high conviction through concentrated positions in named holdings with clear thesis explanations. They provide specific performance attribution, position sizing context (largest positions), and explicit forward-looking statements about adding to specific names. However, the diversified nature across multiple sectors and acknowledgment of uncertainty prevents a higher score.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The managers express a positive long-term market outlook despite acknowledging significant near-term uncertainty. They state their outlook remains positive even with potential turbulence, and see continued opportunities in technology and undervalued traditional sectors.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

The fund is actively adding to positions in undervalued sectors like financials and utilities, showing selective risk appetite. They built up technology exposure during last year's selloff and are now taking advantage of weakness in traditional sectors, indicating moderate risk-on positioning.

Capital Deployment

25%

De-riskingDeploying

De-risking (25%)

The managers are selectively adding to positions in US Bank, JPMorgan, and Alliant Energy, indicating modest deployment activity. They previously built up technology exposure during last year's selloff. No specific cash level changes are mentioned, but the language suggests moderate deployment into undervalued opportunities.

Forward Guidance

30%

CautiousExpansionary

Cautious (30%)

The managers are selectively deploying capital by adding to positions in US Bank, JPMorgan, and Alliant Energy while maintaining their technology positions. They express intention to continue taking advantage of opportunities in undervalued companies with competitive advantages.

Language Signal

20%

BearishBullish

Bearish (20%)

Language is balanced between opportunity and risk recognition. Positive terms include 'excited', 'attractive valuations', 'positive long-term view', while risk language includes 'uncertainty', 'turbulence', 'cautious near-term', and extensive discussion of economic headwinds.

Perceived Risk

72%

Low RiskElevated

Elevated Risk (72%)

The managers identify multiple specific macro risks including banking lending tightening, retail spending slowdown, manufacturing weakness suggesting recession, GDP growth deceleration, and Fed rate hike expectations. They acknowledge 'unusual amount of uncertainty' and discuss various negative economic indicators in detail.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

The managers see selective opportunities in defined areas - particularly attractive valuations in old-economy industries like healthcare, financials, and utilities. They also maintain positive views on technology despite near-term caution. The language suggests good opportunities exist but requires selectivity rather than broad-based abundance.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The fund emphasizes long-term investing throughout the letter, with explicit statements about maintaining long-term views and focusing on companies with durable competitive advantages. They compare AI to the internet transformation and discuss multi-year productivity improvements, indicating a patient, multi-year investment horizon.