2Q2025 - Focus Growth Commentary
After protecting capital in Q1, we increased positions in companies like Starbucks and ServiceNow at attractive valuations in Q2, despite underperforming during the period. Our new investment in Idexx Labs has already gained 34% since purchase. The Focus Growth Composite Portfolio remains fully invested in high-quality businesses that we view as positioned for mid-teens or better long-term earnings growth.
- Market sentiment flipped from a sharp, risk-off drawdown to a historical V-shaped recovery in the quarter, driven by fading tariff fears and an enthusiastic embrace of pro-growth policies. The Russell 1000 Growth Index (the “Index”) rebounded +33% following a rapid -23% correction—a rally concentrated in a small subset of stocks.
- Performance leadership was dominated by AI-focused sectors (especially semiconductors) and high-beta cyclicals, resulting in a dramatic reversal from Q1. Higher-risk managers outperformed after lagging in Q1, illustrating unusually rapid shifts in market dynamics reminiscent of periods like the late 1990s Tech Bubble and early 2020 Covid-19 recovery.
- Top relative contributors included Apple (sold early in the period), Oracle, and Netflix. The largest relative detractors in the quarter were NVIDIA (not owned), Thermo Fisher Scientific, and Broadcom (not owned).
- We initiated a new position in IDEXX Laboratories and eliminated our positions in Apple and UnitedHealth Group. We added to existing positions in Starbucks, ServiceNow, CoStar Group, and Adobe, and trimmed our position in Amazon.