Seeking Alphaยท2025-10-17 06:55Core Insights - The Giverny Capital Asset Management ("GCAM") model portfolio showed a net return of 6.79% for Q3 2025, underperforming the S&P 500 TR which returned 8.12% during the same period [2][4] - Significant declines in key holdings, particularly Constellation Software, which dropped 18% in September due to the sudden retirement of its CEO, Mark Leonard, impacted overall portfolio performance [4][5] - The investment landscape is characterized by a mix of economic uncertainty and stock market exuberance, with concerns about tariffs and the agricultural sector, yet enthusiasm for AI investments remains high [6][7] Performance Overview - The portfolio's year-to-date return stands at 12.57%, trailing the S&P 500's 14.83% [2] - Over the past three years, the portfolio has achieved an annualized return of 24.05%, while the S&P 500 has returned 24.94% [2] - The portfolio's largest holdings include Arista Networks, Alphabet, and Meta Platforms, which collectively represent a significant portion of the total assets [30] Key Holdings and Transactions - The portfolio initiated a 3.5% position in Taiwan Semiconductor (TSM), which is positioned as a leading manufacturer in the semiconductor industry, capitalizing on the growing demand for high-performance chips [19][21] - Medpace Holdings, a contract research organization, saw a substantial increase in stock value, rising over 50% in one day following a strong earnings report [11][12] - The portfolio has trimmed positions in several strong performers, including Alphabet and Meta, while fully exiting Credit Acceptance due to concerns over its competitive position [25] Market Context - The semiconductor industry is experiencing rapid advancements, with TSMC leading in manufacturing capabilities, particularly in producing chips at smaller nanometer specifications [20][22] - The market is currently focused on AI-related stocks, which have significantly contributed to S&P 500 returns since the launch of ChatGPT in November 2022 [13][14] - Concerns about geopolitical risks, particularly regarding Taiwan, are prevalent, as TSMC is a critical supplier for major tech companies [22][24] Investment Philosophy - The portfolio emphasizes investments in companies with founder involvement in management, which is believed to align interests and foster strong corporate cultures [8] - The management team expresses confidence in the quality of their holdings and the leadership of companies like Medpace and TSMC, despite broader market uncertainties [7][12] - The approach remains cautious regarding the sustainability of the current market rally, with a focus on long-term value creation rather than short-term speculation [7][26]