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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Mairs & Power – Power Fund 2024 Q1 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q1 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

Annualized+11.53%

Digest Analysis

Quick Take

"Mairs & Power Growth Fund outperformed in Q1 2024 driven by large Technology positions, particularly Nvidia's 80% gain on AI demand."

Executive Summary

Mairs & Power Growth Fund delivered strong Q1 2024 performance, returning 10.80% and outperforming the S&P 500's 10.56%. The fund benefited from large positions in Technology leaders including Nvidia, which gained over 80% as AI demand surged. The managers believe AI will have profound effects across industries, particularly healthcare, banking, and telecommunications, positioning the fund to capitalize on this transformation through pick and shovel providers of AI tools. While Technology drove performance, the fund added positions in Casey's General Stores and Ulta Beauty, finding value in Old Economy sectors. Key risks include sticky inflation potentially delaying Fed rate cuts, sluggish manufacturing, and elevated market valuations concentrated in Technology stocks. However, the managers see catalysts in AI-powered productivity gains and potential market broadening beyond Technology. The fund remains committed to its disciplined long-term approach, seeking companies with durable competitive advantages that can leverage AI and technology to drive revenue and productivity gains.

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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

72%

CautiousHigh

High Conviction (72%)

The fund demonstrates high conviction through concentrated positions in named Technology holdings like Nvidia (6.04% of portfolio) and Microsoft (10.11%). Managers provide specific thesis explanations for new additions Casey's and Ulta, with clear rationale for each position. The letter discusses specific position sizing and building positions, indicating strong conviction in their picks.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The managers express cautious optimism about market opportunities while acknowledging significant risks. They see potential in AI transformation and market broadening but note concerns about inflation, manufacturing weakness, and elevated valuations concentrated in Technology stocks.

Risk Appetite

50%

DefensiveAggressive

Balanced (50%)

The fund maintains significant exposure to Technology leaders while selectively adding new positions in Old Economy sectors. They are actively deploying capital but with disciplined selectivity, suggesting moderate risk appetite balanced with caution.

Capital Deployment

25%

De-riskingDeploying

De-risking (25%)

The fund added two new positions (Casey's and Ulta) and continued building the Verizon position during the quarter. However, no cash level changes are reported, and the activity appears to be selective additions rather than aggressive deployment. This suggests modest net deployment activity.

Forward Guidance

30%

CautiousExpansionary

Cautious (30%)

The managers plan to continue their disciplined long-term approach and are actively seeking opportunities in companies that can leverage AI for productivity gains. However, they emphasize selectivity and patience rather than aggressive deployment.

Language Signal

20%

BearishBullish

Bearish (20%)

Language is balanced with both opportunity and risk language. Positive terms include 'attractive opportunities,' 'well positioned,' and 'impressive value,' while risk language includes 'concerns,' 'sluggish,' and 'elevated valuations.' Slightly more cautious than bullish overall.

Perceived Risk

65%

Low RiskElevated

Elevated Risk (65%)

The managers identify multiple specific risks including sticky inflation, manufacturing weakness, consumer spending concerns, and elevated market valuations. They discuss these risks in detail with specific data points like PCE index levels and 401(k) loan percentages, indicating meaningful risk awareness.

Opportunity Density

60%

ScarceAbundant

Selective (60%)

The managers see selective opportunities, particularly in Old Economy sectors trading at discounts and companies that can leverage AI. They note finding 'impressive value outside of Technology sector' but emphasize the need for selectivity, suggesting moderate opportunity density.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The fund emphasizes long-term investing with focus on 'durable competitive advantages for the long-term' and commitment to their investment philosophy 'across entire economic cycles.' They discuss multi-year themes like AI transformation and demographic trends, indicating a multi-year investment horizon.