Wedgewood Partners, an investment management firm, has issued its investor letter for the fourth quarter of 2025. The company stated it expects stronger market volatility in the coming years and has moderated its enthusiasm. A copy of the letter is available for download.
The Wedgewood Composite returned -1.8% net in the fourth quarter. This compares to returns of 2.7% for the S&P 500, 1.1% for the Russell 1000 Growth Index, and 3.8% for the Russell 1000 Value Index. Year-to-date, the Composite gained 4.3%, while the indexes returned 17.9%, 18.6%, and 15.9% respectively.
While Wedgewood's focus on high-quality stocks has historically worked since 1992, it did not in 2025. The letter identified poor stock selection, valuation corrections for past strong performers, and being structurally underweight in AI stocks as drivers of the underperformance. For 2026, the letter noted that crowded AI investments and stretched valuations create pressure on prudent investment decisions.
In its letter, Wedgewood Partners highlighted Apple Inc. (NASDAQ:AAPL). Apple's one-month return was -5.70%, while its shares gained 11.11% over the last 52 weeks. On January 16, 2026, Apple stock closed at $255.52 per share with a market capitalization of $3.76 trillion.
Wedgewood Partners stated regarding Apple Inc. in its letter: "Apple Inc. (NASDAQ:AAPL) contributed to performance as adjusted earnings per share grew +13%, driven by +15% revenue growth in its services business, which accelerated compared to last quarter and generated over $100 billion in revenue over the past 12 months. Further, the Company guided to strong double-digit revenue growth in its holiday quarter, driven by double-digit growth in iPhone revenues, as it experienced strong demand after launching several new models in the previous quarter. Apple's multi-decade consistency in executing on hardware and software upgrades, along with increasingly proprietary silicon content, provides consumers with a dependable, high-quality user experience that should continue to drive adoption and trade-up."
Apple Inc. is in 8th position on a list of 30 Most Popular Stocks Among Hedge Funds. According to database information, 166 hedge fund portfolios held Apple at the end of the third quarter, up from 156 in the previous quarter. Apple reported revenue of $102.5 billion in the September quarter, an 8% year-over-year increase.