Wedgewood Partners, an investment management firm, issued its fourth-quarter 2025 investor letter. The company expects heightened market volatility in the coming years and has tempered its optimism. The Wedgewood Composite returned -1.8% net in the fourth quarter, while the S&P 500 gained 2.7%, the Russell 1000 Growth Index rose 1.1%, and the Russell 1000 Value Index increased 3.8%. Year-to-date, the Composite is up 4.3%, compared to 17.9%, 18.6%, and 15.9% for those indexes, respectively.
The firm's strategy of focusing on high-quality stocks, effective since 1992, did not perform well in 2025. The letter cited poor stock selection, valuation corrections for past strong performers in the portfolio, and a structural underweight in AI stocks as reasons for the lagging results. It noted that crowded AI investments and stretched valuations in 2026 are creating pressure on careful investment decisions.
In the letter, Wedgewood Partners highlighted Motorola Solutions, Inc. (NYSE:MSI), a provider of public safety and enterprise security solutions. Motorola Solutions saw a one-month return of 7.49%, but its shares fell 13.82% over the past 52 weeks. On January 16, 2026, the stock closed at $400.61 per share, with a market capitalization of $66.743 billion.
Regarding Motorola Solutions, Inc. (NYSE:MSI), Wedgewood Partners stated: "Although Motorola Solutions, Inc. grew its revenues +8% and grew earnings per share +9%, and expects to see similar growth in 2026, despite the headwinds of a government shutdown and dilution from their acquisition of aerial drone communications provider, Silvus Technologies, the stock was a poor performer in 2025. However, we expect to see accelerating growth into 2026 as organic orders have accelerated to double-digits in both products and services. As the stock sold off during the quarter, it traded to what were more attractive relative and historical forward price to earnings multiples; accordingly, we added to positions."