Laughing Water Capital, an investment management firm, has issued its investor letter for the fourth quarter of 2025. The firm reported a return of approximately 6.8% for the quarter, bringing its net annual return to about 3.9% after fees and expenses. Over the same quarter, the S&P 500 Total Return Index and the Russell 2000 Index returned roughly 2.7% and 2.2%, respectively. For the full year, those indexes gained 17.9% and 12.8%.
The fund's performance last year exceeded these benchmarks, though it has trailed them in the current year. The letter notes that long-term cumulative returns are the primary focus, as volatility diminishes over time. Since its inception, the portfolio has returned about 400% cumulatively, compared to approximately 332% for the S&P 500 TR and around 175% for the Russell 2000.
In the letter, Laughing Water Capital highlighted its holding in Liquidia Corporation, traded on NASDAQ under LQDA. Liquidia is a biopharmaceutical company based in the United States that develops and commercializes products for unmet patient needs. Over the past month, its stock returned 12.34%, and it has gained 200.93% over the last 52 weeks. On January 15, 2026, Liquidia shares closed at $38.79 each, giving the company a market capitalization of $3.375 billion.
Regarding Liquidia Corporation, Laughing Water Capital stated in the letter: "Liquidia Corporation (NASDAQ:LQDA) – Liquidia was first introduced anonymously in the YE'24 letter to LPs. At the time, the company was a pre-approval biopharmaceutical company that was mired in patent lawsuits filed by an incumbent (United Therapeutics - UTHR) that was seeking to defend their market position versus an upstart that seems to have a superior product. Since that time, Liquidia's drug – Yutrepia – has been approved for treatment of pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD). Early sales of Yutrepia have crushed expectations as patients – and prescribers - seem to prefer Yutrepia vs. the incumbent due to superior delivery and tolerability. Between appreciation and adding to the position as the company reached important milestones, LQDA has grown into a top position."