L1 Capital, an investment management firm, has released the investor letter for its L1 Capital International Fund covering the fourth quarter of 2025. The letter details the fund's performance, positioning, and portfolio adjustments for the period ending December 2025.
The fund returned 2.2% net of fees for the quarter, compared to a benchmark return of 2.5%. For the full year 2025, the fund returned 9.8% net of fees, while the benchmark index returned 12.4%. The strategy focuses on investing in high-quality companies with favorable cashflow-based valuations.
In the letter, the firm highlighted Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as a specific holding. The stock closed at $327.11 per share on January 14, 2026, giving it a market capitalization of $1.4 trillion. Over the past month, the stock returned 14.90%, and it gained 52.29% over the last 52 weeks.
Regarding Taiwan Semiconductor Manufacturing Company, L1 Capital International Fund stated: "Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the leading manufacturer of semiconductor chips used in AI, mobile phone and other applications. TSMC continues to benefit from extremely strong demand conditions and industry-leading manufacturing capabilities. Capacity has been expanded domestically in Taiwan, as well as large investments in manufacturing in the U.S. and other international markets. Financial performance continues to exceed base case expectations, and we believe the business has a long runway for future growth. Following substantial share price outperformance, TSMC is trading within our assessed fair value range but remains a top 10 holding."
According to the letter, the firm considers valuation analysis essential for potential AI-focused investments, stating that merely having conviction in AI isn't enough to ensure a successful investment outcome. The letter also noted that 2025 was a strong year for all stock markets globally.
Taiwan Semiconductor Manufacturing Company is in 9th position on a list of 30 Most Popular Stocks Among Hedge Funds. At the end of the third quarter of 2025, 194 hedge fund portfolios held the stock, compared to 187 in the previous quarter. The company's revenue increased 6% sequentially in the third quarter of 2025.