Fenimore Asset Management has published its investor letter for the fourth quarter of 2025. The document is available for download. The stock market in 2025 was solid but experienced volatility. Investors balanced enthusiasm for artificial intelligence with economic uncertainty and monetary policy concerns.
A summer rally was driven by AI-related spending and economic resilience. The fourth quarter saw increased market volatility due to valuation pressures and macroeconomic uncertainty. Large-cap technology and communication services stocks led the market during the quarter, with the S&P 500 Index rising 2.66%.
The firm stated that the trend of AI stocks outperforming high-quality stocks is unsustainable. Fenimore's Small Cap Strategy returned -4.12% in Q4 2025, trailing the Russell 2000 Index's return of 2.19%. Underperformance was driven by an underweight exposure to low-quality stocks.
Fenimore's Dividend Focus Strategy declined -4.41% in the quarter, compared to the Russell Midcap Index's return of 0.16%. The firm's Value Strategy declined -1.17% in Q4, also against the Russell Midcap Index's 0.16% return. Investments in the financial and industrial sectors contributed to the strategy's relative underperformance.
Fenimore expects mixed market conditions in 2026. Many AI-related stocks appear expensive, while high-quality companies are trading at multi-year lows, which the firm sees as creating opportunities.
In the letter, Fenimore highlighted Amphenol Corporation. Amphenol designs and manufactures electrical, electronic, and fiber optic connectors. The stock was the top performer in both the Fenimore Value Strategy and the Fenimore Dividend Focus Strategy.
On January 15, 2026, Amphenol stock closed at $154.22 per share. Its one-month return was 13.99%, and its shares gained 122.15% over the last 52 weeks. Amphenol has a market capitalization of $188.774 billion.
Fenimore Asset Management stated the following regarding Amphenol Corporation in its fourth quarter 2025 investor letter: "Amphenol Corporation (NYSE:APH) is a beneficiary of data center buildouts supporting AI. This has propelled demand for products in their IT Datacom segment, which grew 128% organically in the most recent quarter. APH also supplements growth with accretive acquisitions."
According to a database, 89 hedge fund portfolios held Amphenol Corporation at the end of the third quarter, up from 81 in the previous quarter. Amphenol's third quarter sales increased 53% in US dollars and 52% in local currencies to $6.194 billion.