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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Mairs & Power – Power Fund 2024 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Mairs & Power – Power Fund)

Primary Source Intelligence • Q2 2024 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+14.32%

Annualized+11.53%

Digest Analysis

Quick Take

"Mairs & Power Growth Fund leverages AI boom through Nvidia, Qualcomm, and Microsoft while finding value in beaten-down Healthcare and Industrial sectors."

Executive Summary

The Mairs & Power Growth Fund returned 14.32% year-to-date through Q2 2024, slightly trailing the S&P 500's 15.29% return. The fund's performance was driven by significant positions in AI beneficiaries including Nvidia (up 150% YTD), Qualcomm, Microsoft, Amazon, and Alphabet, which together generated over 60% of market returns. Nvidia continues to dominate with cutting-edge GPU chips for generative AI and the upcoming Blackwell architecture launch. The fund also benefits from AI adoption through companies like Qualcomm's cellular modem monopoly and nVent's liquid cooling solutions for datacenters. While Old Economy sectors like Healthcare and Industrials have lagged, the managers are adding to positions as they see signs of a bottom. The broader market appears overvalued due to mega-cap concentration, but the remaining 490 S&P companies trade at reasonable historical valuations. With Fed rate cuts likely due to improving inflation metrics, smaller companies could benefit from reduced borrowing costs, creating opportunities beyond the current AI-driven leaders.

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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 like Nvidia (7.83% of portfolio), Microsoft (10.57%), and specific thesis explanations for each. Managers provide detailed rationale for Qualcomm's modem monopoly and nVent's AI datacenter opportunity, though the diversified portfolio structure and hedged language around market conditions prevents a higher score.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The managers express cautious optimism about future prospects, citing improving inflation metrics and potential Fed rate cuts. However, they acknowledge economic slowdown in Q2 with rising unemployment and declining consumer confidence, balancing positive Fed policy expectations with near-term economic headwinds.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

The fund maintains significant exposure to AI beneficiaries and is selectively adding to Healthcare and Industrial positions where they see bottoming. This represents a moderate risk-on stance, though they acknowledge market concentration risks and employ valuation discipline rather than aggressive deployment.

Capital Deployment

25%

De-riskingDeploying

De-risking (25%)

The managers are selectively adding to Healthcare and Industrial positions where they see signs of bottoming, indicating modest deployment activity. However, no specific cash level changes are mentioned, and the emphasis on valuation discipline and selectivity suggests measured rather than aggressive deployment.

Forward Guidance

30%

CautiousExpansionary

Cautious (30%)

Managers plan to continue examining opportunities in well-run companies with competitive advantages at attractive prices. They are adding to Healthcare and Industrial positions but emphasize selectivity and valuation discipline rather than aggressive deployment, suggesting measured optimism.

Language Signal

20%

BearishBullish

Bearish (20%)

Language is balanced between opportunity recognition (AI adoption, attractive valuations in non-mega caps) and risk acknowledgment (market overvaluation, economic slowdown). Positive terms like 'delighted,' 'promising growth opportunity,' and 'cautiously optimistic' are offset by concerns about overvaluation and sector weakness.

Perceived Risk

55%

Low RiskElevated

Moderate Risk (55%)

Managers identify several specific risks including market overvaluation concentrated in the largest 10 companies, high interest rates hurting smaller companies' earnings, and economic slowdown with rising unemployment. They discuss these risks in meaningful detail while maintaining that opportunities exist, indicating moderate risk perception.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

The managers see selective opportunities across multiple areas - continued AI adoption benefits, attractive valuations in the remaining 490 S&P companies outside mega-caps, and bottoming in Healthcare and Industrial sectors. They emphasize finding 'good opportunities' through valuation discipline, suggesting a moderately rich opportunity set in defined areas.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

The fund emphasizes 'long-term prospects for AI' and describes Qualcomm as a 'long-term holding.' Managers focus on companies with 'durable competitive advantages' and discuss multi-year themes like AI adoption and Fed policy cycles. The investment approach centers on fundamental company quality rather than near-term catalysts, indicating a multi-year investment horizon.