GreensKeeper Worth Fund This autumn 2025 Letter

Renewal

The Worth Fund posted a return of +0.4% for 2025. (1) Our outcomes have been considerably dampened by foreign money headwinds; particularly, the weakening U.S. greenback created a drag of roughly -4.3% on full-year returns.

Whereas we keep a long-term coverage of not hedging foreign money fluctuations to keep away from excessive transaction prices, years like 2025 reveal the short-term volatility this may introduce to our outcomes. We stay dedicated to this “lengthy sport” strategy, as the associated fee financial savings of remaining unhedged traditionally outweigh these periodic fluctuations.

We trailed the broader markets in a 12 months outlined by continued upward momentum. The S&P/TSX led the cost with a +31.7% return, pushed largely by its supplies subsector (gold). Within the U.S., the S&P 500 +12.5% and DJIA +9.7% additionally superior. (2) For the S&P 500, efficiency was as soon as once more pushed by a handful of names reasonably than broad participation.

The “Magnificent Seven” (Alphabet, Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA)) have been accountable for 42% of the S&P 500’s good points. This distortion is obvious when viewing the S&P 500 Equal Weight Index, which returned solely 6.4%—a major 6.1% lag behind its market-cap-weighted cousin. (3) The pervasiveness of price-insensitive passive indexing is probably going exacerbating these results.

We admire the enterprise fashions of many of the Magnificent Seven and their dominance in technological innovation, notably AI. We’d fortunately personal most of them on the proper worth—certainly, Alphabet has been a portfolio holding for years.

Nonetheless, we stay grounded within the easy fact that even a beautiful enterprise is just not price an infinite worth. As this bull market matures, we hear more and more unique arguments designed to justify excessive valuations and irrational risk-taking. We pay attention politely to those newest variations of ‘this time is completely different,’ and easily allocate our capital elsewhere.

We have been in good firm. Different revered worth managers, similar to Terry Smith of Fundsmith, have been equally underweight the ‘Magnificent Seven’ and trailed the indices consequently. Like them, we refuse to desert our self-discipline just because the market has develop into costly—and in some pockets, indifferent from actuality.

Being out of step with the group is an occupational hazard for worth traders. Even legends endure intervals of doubt. Think about this distinguished Barron’s cowl story from December 1999, which argued that Warren Buffett had ‘misplaced his magic contact’ and develop into ‘too conservative, even passé. ’ The dot-com bubble burst simply three months later, and this episode was rapidly forgotten (however not by us). Buffett’s long-term monitor document—and the advantage of endurance— communicate for themselves.

In a market the place valuations stay stretched, we intentionally prioritized capital preservation by trimming—or exiting—a number of positions that had reached our worth targets. Our 2025 returns have been additionally affected by a single poor inventory choose—our funding in Fiserv—mentioned intimately within the Portfolio Replace beneath.

Errors are an unavoidable actuality of investing. Reasonably than sweep them below the rug, we undertake Charlie Munger’s apply of rubbing our noses in them. It’s an uncomfortable train, however it’s the solely option to actually be taught and be sure that errors are usually not repeated.

The Worth Fund has now delivered constructive returns in 13 of its 14 years. Whereas we’re pleased with this monitor document, we acknowledge that our 2025 efficiency lagged.

However just like the seasons, every new 12 months brings renewal. Few traders possess the self-discipline to stay with a technique during times of underperformance, notably within the later phases of a bull market. I can guarantee you that we do.

We enter 2026 with a defensive posture—money and equivalents at the moment symbolize 14.7% of the portfolio—and a agency perception that, over the long term, valuations matter.

Portfolio Replace

Our prime performer in 2025 was Alphabet Inc. (GOOG) +64.8%. Alphabet had a unstable 12 months, with its shares ending the 12 months 120% above the low reached in April. We have now owned GOOG since 2018 and are not any strangers to cost swings (see the charts beneath). In our view, final 12 months’s inventory volatility was a textbook instance of worth decoupling from worth—pushed extra by shifting market narratives and sentiment than by any materials change in Alphabet’s underlying fundamentals or intrinsic worth.

The dominant narrative of 2025 was the market’s evolving view of Alphabet’s search enterprise in an AI-first world. Since ChatGPT’s launch in 2022, the prevailing worry has been that Google was late to the celebration and liable to displacement, a lot because it displaced incumbents in prior a long time.

We took the contrarian view, believing the market had written off the enterprise too rapidly. Alphabet nonetheless instructions roughly 90% of net search, generates over $150bn in annual working money circulation, and stays a magnet for world-class analysis expertise. Its DeepMind division is on the modern of AI-related breakthroughs. YouTube holds a dominant market share and can be a proprietary asset for coaching Gemini fashions.

Because the 12 months progressed, Alphabet silenced the doubters. The corporate aggressively remodeled its analysis into consumer-ready merchandise. Importantly, its proprietary Tensor Processing Models (TPUs) allowed the corporate to scale infrastructure way more effectively than rivals. Through the use of its personal silicon, Google avoids the so-called “Nvidia Tax”—the steep markup rivals pay for third-party chips—giving it a structural value benefit. This effectivity powered the deployment of Gemini 3, which by November was main key efficiency benchmarks throughout textual content, picture, and video.

Alphabet additionally launched and built-in AI Overviews and AI mode inside search, the biggest overhaul of its search product in a few years, all whereas persevering with to develop revenues at a lovely charge.

We imagine Alphabet’s future stays vivid. Its capability to distribute AI throughout a large product suite utilized by billions, whereas self-funding infrastructure, is a formidable moat. Nonetheless, because the inventory appreciated quickly, it approached our estimate of intrinsic worth and grew to an outsized portion of the portfolio. In line with our self-discipline, we trimmed the place to handle danger, taking income whereas sustaining GOOG as one in every of our largest holdings.

American Categorical (AXP) was our second-largest contributor in 2025, returning +24.7%. The corporate delivered constant double-digit income development, underpinned by the spending energy of its premium shopper base.

Early indicators from the platinum card refresh (and charge enhance) launched in late Q3 have been constructive, and administration expects the up to date product to assist development in 2026. Strategic initiatives to courtroom youthful generations are paying off. Millennials and Gen Z accounted for 60% of worldwide new account acquisitions. Furthermore, these new members are energetic: their spending accelerated by 40% within the second half of the 12 months. Crucially, this development didn’t come at the price of credit score high quality. Delinquencies remained low all year long, standing in stark distinction to the rising defaults seen at different issuers catering to much less prosperous shoppers.

Compagnie Financière Richemont (CFRUY) was our third-largest contributor in 2025, gaining 41.8%. True to our authentic thesis, Richemont’s Jewellery Maisons (Cartier, Van Cleef & Arpels, and Buccellati) continued to outperform the broader luxurious market.

A key growth was the stabilization of the Chinese language shopper. Gross sales in China turned constructive in Q2 and Q3, ending a streak of quarterly declines relationship again to 2023. With Asia accounting for a 3rd of gross sales, and all different areas rising at double-digit charges, the income outlook is strengthening.

On the associated fee aspect, the surge in treasured metallic costs (gold +64%, silver +150%) presents a margin headwind. Whereas Richemont possesses immense pricing energy, administration stays fiercely protecting of name stewardship. They’ve traditionally prevented aggressive worth hikes which may later require reversals. Whereas this self-discipline could sacrifice some short-term margin, it preserves long-term model fairness with prospects.

This strategy proved superior in 2025: whereas luxurious friends eroded their model worth by discounting to clear stock, Richemont maintained its status and pricing integrity. This long-term pondering is all too uncommon, and one of many issues we like in regards to the firm’s administration.

Our worst performer by far in 2025 was Fiserv Inc. (FISV), which declined 67.3%. To place it bluntly: we obtained this one improper. Our thesis collapsed attributable to a mixture of deteriorating fundamentals and a cloth reassessment of previous development high quality.

New administration peeled again the curtain in Q3, revealing that the double-digit natural development of latest years was an phantasm fueled by Argentine inflation accounting. When adjusted, development was lower than half of what was reported. This means that reasonably than gaining share as we believed, Fiserv had been ceding floor to rivals. Worse, it seems prior administration ‘borrowed’ from the long run to spice up short-term earnings—pressuring legacy purchasers, mountain climbing costs aggressively, and ravenous core banking platforms of funding. To say that we felt misled is an understatement.

Following these disclosures, we fully re-underwrote the funding. We have now lowered our intrinsic worth estimate to replicate the decrease development profile and the capital required to repair the enterprise. Nonetheless, with the inventory buying and selling at 8x earnings and a 13% free money circulation yield, we imagine that pessimism is absolutely priced in.

We assist the brand new administration crew’s efforts to ‘proper the ship’—together with rolling again worth hikes and resuming obligatory investments—although these strikes will weigh on near-term outcomes.

We have now maintained our place—for now—however our categorization of Fiserv has modified. We not view the corporate as a long-term compounder. We now view the inventory as an opportunistic worth funding and can look to exit because it approaches our revised worth goal.

Our second-largest detractor was Lululemon Athletica (LULU), down 45.7%. The decline displays issues over the sustainability of development: whereas the corporate grew 7% globally, same-store gross sales within the Americas contracted by roughly 5%.

Our evaluation suggests the model stays wholesome, however execution faltered. Product launches lacked the ‘newness’ wanted to have interaction U.S. shoppers. We view the upcoming Spring 2026 assortment—the primary below the brand new Artistic Director—as a vital take a look at of the corporate’s capability to right this misstep. Worldwide same-store gross sales proceed to develop rapidly, and LULU is ready to increase additional into Europe and Asia in 2026.

The inventory confronted an extra exterior shock from U.S. commerce coverage. The elimination of the ‘de minimis’ exemption hit Lululemon uniquely laborious, as the corporate fulfilled almost 70% of its U.S. e-commerce orders from Canadian distribution facilities that beforehand loved duty-free standing. This modification compressed margins by roughly 4%. If our view of the model’s pricing energy holds true, Lululemon ought to be capable of recapture these margins over time by logistics changes and selective worth will increase.

Late within the 12 months, the corporate introduced a major management transition: CEO Calvin McDonald shall be stepping down, and the Board has initiated a seek for his successor. We stay satisfied that the model fairness is unbroken. The trail to restoration is evident: a return to the product-first, technical innovation that constructed Lululemon’s fame. If the corporate executes on this ‘again to fundamentals’ technique, we anticipate the Americas phase to renew its development trajectory and the inventory to rerate.

We have been comparatively energetic with the portfolio through the 12 months. Pushed by a widening disparity in valuations, we fully bought out of 4 positions: Vertex Prescription drugs (VRTX), Merck & Co. (MRK), Test Level Software program Applied sciences Ltd. (CHKP) and CBOE World Inc. (CBOE)—and initiated three new ones highlighted beneath.

In our view, the market is underappreciating the sturdiness and breadth of Novo Nordisk’s (NVO) GLP-1 franchise relative to the large world weight problems alternative. This thesis was bolstered shortly after year-end, when Novo launched the oral formulation of Wegovy within the U.S. to early indicators of sturdy demand. The inventory is up 22% YTD in 2026 as of writing.

Since publishing our thesis on Icon PLC (ICLR) in Might, the trade backdrop has begun to enhance. Massive pharmaceutical firms have signed agreements with the Trump administration, offering much-needed readability on tariffs and drug pricing coverage. Concurrently, biotech exercise picked up within the second half of the 12 months—notably for Part II and III belongings—which units the stage for a stronger 2026 for contract analysis organizations (CROs) like Icon.

ICLR has recovered from the lows seen in Might, however the firm continues to be managing by elevated cancellations. Gross enterprise wins stay in step with friends, suggesting the corporate’s aggressive positioning stays intact. As soon as the elevated cancellations circulation by the backlog, income development ought to reaccelerate.

Our most up-to-date addition to the Worth Fund is Adobe Inc. (ADBE). Like a lot of the software program sector, Adobe struggled in 2025 below the burden of a prevailing narrative: that Generative AI will render its core inventive suite out of date. We imagine this danger is vastly overstated and that Adobe is uniquely positioned to combine AI fashions into its workflow, cementing its standing because the standard-bearer for skilled creatives. With the inventory buying and selling at simply 16x earnings, income rising at ~10%, and the corporate aggressively repurchasing shares, the chance/reward setup was too favorable to disregard

The Worth Fund completed 2025 with a internet return of +0.4%. We ended the 12 months with a defensive money place of 14.7% and a complete portfolio worth of $57.3 million, which incorporates $18.9 million in unrealized good points.

We stay dedicated to long-term possession. Our common portfolio turnover over the previous 5 years is simply 12.4%, implying a mean holding interval of roughly eight years. Nonetheless, as famous earlier, our valuation self-discipline led us to trim a number of long-held winners this 12 months. This resulted in realized capital good points, which have been distributed to unitholders and mechanically reinvested in further models on December 31, 2025.

Further efficiency statistics and disclosures comply with this letter. A complete snapshot of the portfolio shall be offered to purchasers after MNP completes its audit of the Fund’s monetary statements in March. Please see the desk beneath for our prime 10 holdings at 12 months’s finish.

Agency Replace

Given the reception to our earlier Digital City Corridor, which you’ll be able to watch right here, we shall be internet hosting one other one this spring. We sit up for sharing the date and registration particulars within the coming weeks.

It has been an eventful 12 months at GreensKeeper:

• GreensKeeper accomplished its registration with the US Securities and Change Fee (SEC). This expands our capability to tackle further U.S. purchasers. We’re already including to our shopper base and sit up for welcoming extra worldwide companions to our agency in 2026.
• Michael Van Loon is now registered as an Affiliate Portfolio Supervisor, is a CFA Stage III candidate and continues to tackle further analysis, buying and selling, and compliance obligations on the agency.

We imagine true accountability comes from shared outcomes. Each member of our crew has their total funding portfolio positioned alongside yours. In my case, it accounts for the majority of my internet price. This alignment ensures that our focus stays precisely the place it ought to be: defending capital and delivering enticing risk-adjusted returns. In an trade the place few actually “eat their very own cooking, ” we view it as a privilege to accomplice with our purchasers.

Thanks in your continued belief and for the chance to develop your wealth alongside our personal

Michael P. McCloskey, President, Founder & Chief Funding Officer

Michael Van Loon, Affiliate Portfolio Supervisor

Authentic Submit

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