Wedgewood Partners has released its fourth-quarter 2025 investor letter, showing the Wedgewood Composite returned -1.8% net for the period. This performance trailed the S&P 500's 2.7% gain, the Russell 1000 Growth Index's 1.1%, and the Russell 1000 Value Index's 3.8%. Year-to-date, the Composite gained 4.3%, while the indexes returned 17.9%, 18.6%, and 15.9% respectively.
The investment management firm stated that its focus on high-quality stocks, which has worked since 1992, did not succeed in 2025. The letter cited poor stock selection, valuation corrections for past strong performers, and being structurally underweight in AI stocks as reasons for the underperformance.
Meta Platforms, Inc. was identified as a leading detractor from performance during the quarter. On January 16, 2026, Meta stock closed at $620.25 per share, with a one-month return of -6.24% and a 52-week gain of 1.22%. The company has a market capitalization of $1.56 trillion.
"Meta Platforms, Inc. was a leading detractor from performance during the quarter despite reporting +26% revenue growth," the letter stated. "Earnings per share grew less (+20%) after the Company ramped up spending related to its long-term AI ambitions."
The letter noted Meta's social media platforms remain highly popular, with daily active users rising 8% during the September quarter compared to a year earlier. Users spent 5% more time on Meta's applications, and over 3.5 billion people access one of Meta's platforms daily.
Wedgewood Partners anticipates stronger market volatility in coming years and has moderated its enthusiasm. The letter noted that in 2026, crowded AI investments and stretched valuations create pressure on prudent investment decisions.