Laughing Water Capital, an investment management firm, has issued its investor letter for the fourth quarter of 2025. The fund returned approximately 6.8% in that quarter, bringing its net annual return to about 3.9% after fees and expenses. Over the same quarter, the SP500TR and R2000 indexes returned roughly 2.7% and 2.2%, respectively. For the full year, those indexes gained 17.9% and 12.8%.
The fund's cumulative performance since inception stands at about 400%, compared to approximately 332% for the SP500TR and 175% for the R2000. The letter states the portfolio is well-positioned for long-term returns, as volatility tends to smooth over time.
In the letter, Laughing Water Capital highlighted Lifecore Biomedical, Inc. (NASDAQ:LFCR), an integrated contract development and manufacturing organization. On January 15, 2026, Lifecore's stock closed at $8.10 per share. Its one-month return was 0.75%, and it gained 25.00% over the past 52 weeks. The company has a market capitalization of $303.477 million.
Regarding Lifecore Biomedical, Laughing Water Capital stated: "Lifecore, also discussed above, appreciated ~10% on the year despite fantastic execution toward the only thing that matters: increasing capacity utilization. Importantly for us, it seems as if the necessary elements of earnings power improvement and a re rating are already in place. On slide 11 of the company’s investor presentation, the company lays out a bridge for how they expect to fill their capacity in the years to come. This slide was first presented at the company’s Investor Day in November of 2024, and has not yet been updated. In this bridge, the 'New Business' piece for the Mid Term and Long-Term are approximately $11M and $34M respectively. The $34M of Long-Term new business represents approximately 11% of total capacity."
According to database information, 17 hedge fund portfolios held Lifecore Biomedical at the end of the third quarter, up from 15 in the previous quarter. In a previous quarter investor letter, Laughing Water Capital noted that Lifecore's stock declined 22% after investors misinterpreted a routine S-3 shelf filing as dilution risk.