Core Insights - The favorable antitrust ruling for Alphabet's Google has allowed the company to maintain its core search business, positively impacting its stock performance and contributing 3.1% to the fund this quarter [3] - UnitedHealth's stock rebounded after a significant decline earlier in the year, adding 0.9% to the fund, driven by optimistic comments from the new CEO and investment interest from Berkshire Hathaway [4] - Progressive was the largest detractor in the quarter, reducing performance by 0.5% due to concerns over lower interest rates affecting investment income [5] Performance Summary - The Bretton Fund achieved a return of 8.21% for the third quarter, outperforming the S&P 500 Index, which returned 8.12% [7] - Over the past year, the fund's return was 8.92%, while the S&P 500 Index returned 17.60% [7] - The fund's inception date was September 30, 2010, and it has delivered a 12.89% return since inception [7] Portfolio Composition - As of September 30, 2025, Alphabet Inc. constituted 11.51% of the fund's net assets, making it the largest holding [11] - Other significant holdings included AutoZone Inc. at 7.11% and The Progressive Corporation at 6.84% [11] - The fund also held positions in major companies like American Express, JPMorgan Chase, and UnitedHealth, each contributing to the overall portfolio diversity [11] Investment Actions - The fund sold its position in Union Pacific Corp after nearly 15 years, achieving a 13% annualized internal rate of return [14] - The decision to sell was influenced by concerns over a pending acquisition that could dilute shareholder value and distract management from core operations [15]

Core Viewpoint - O'Reilly Automotive is expected to report improved earnings and revenue for the third quarter, indicating positive growth trends in the automotive retail sector [1]. Earnings Expectations - The company is projected to report earnings of 83 cents per share for Q3, an increase from 76 cents per share in the same period last year [1]. - The consensus estimate for quarterly revenue is $4.69 billion, up from $4.36 billion a year earlier [1]. Recent Performance and Guidance - In Q2, O'Reilly Automotive posted in-line earnings and raised its FY25 sales guidance, reflecting confidence in future performance [2]. - The stock price increased by 0.3% to close at $101.31 on the day prior to the earnings announcement [2]. Analyst Ratings and Price Targets - Wells Fargo analyst Zachary Fadem maintained an Overweight rating and raised the price target from $105 to $115 [4]. - UBS analyst Michael Lasser maintained a Buy rating and increased the price target from $115 to $120 [4]. - TD Cowen analyst Max Rakhlenko maintained a Buy rating and raised the price target from $112 to $125 [4]. - Evercore ISI Group analyst Greg Melich maintained an Outperform rating and increased the price target from $108 to $110 [4]. - DA Davidson analyst Michael Baker maintained a Buy rating and raised the price target from $107 to $115 [4].

Market Overview - The market finished slightly in the green, with the S&P 500 approaching 6700, and the NASDAQ up about 0.7% [5][3] - The semiconductor sector showed strong performance, increasing nearly 3% [2][3] Company Earnings - United Airlines reported a third-quarter adjusted EPS of $2.78, beating estimates of $2.66, with CapEx at $6 billion and operating revenue meeting expectations [6][7] - The outlook for United Airlines indicates a fourth-quarter adjusted EPS of $3 to $3.50, surpassing the street's expectation of $2.82 [8][11] - J.B. Hunt's third-quarter EPS was $1.76, exceeding expectations by $0.30, with total revenue of $3.05 billion, also above the forecast [23][24] Individual Stock Performances - Advanced Micro Devices (AMD) stock rose about 9% after HSBC raised its price target from $185 to $310 [15] - Bank of America and Morgan Stanley saw stock increases of approximately 4.5% and 4.7%, respectively, driven by strong earnings and increased investment banking activity [16] - Papa John's Pizza stock increased over 9% following a bid from Apollo Global to take the company private at $64 per share [18] Economic Context - The market dynamics are influenced by ongoing trade tensions between the U.S. and China, particularly regarding rare earth minerals [3][4] - The Federal Reserve's Beige Book indicated a K-shaped economy, with some consumers continuing to spend on services despite broader economic uncertainties [11][12]

Group 1 - Publicly traded companies issue shares for various reasons, including raising capital through initial public offerings (IPOs) and secondary offerings [1] - Companies may also initiate stock splits, which do not raise money but change the number of shares and their value, maintaining overall valuation [2] - Stock splits are often executed after significant price increases, as seen with O'Reilly Automotive and Coca-Cola Consolidated, which have risen 497% and 473% over the last decade [3] Group 2 - O'Reilly Automotive operates approximately 6,500 retail stores in North America, focusing on maintenance and repair of used vehicles, achieving operating margins of 19% [5] - Analysts at TD Cowen have set a price target of $125 per share for O'Reilly, indicating a potential upside of about 21% within a one-year outlook [6] - O'Reilly is enhancing earnings per share (EPS) growth through stock buybacks, while Coca-Cola Consolidated is investing in manufacturing facilities to improve profit margins [7]

Core Viewpoint - Recent buyback announcements from three companies signal confidence in their future cash generation and potential undervaluation of their shares [1][2]. Group 1: Lockheed Martin - Lockheed Martin announced a $2 billion increase to its share buyback capacity, bringing the total to $9.1 billion, which is 7.7% of its market capitalization of approximately $118 billion [3][4]. - The company has underperformed with a 6% return in 2025, compared to a 43% return of the iShares U.S. Aerospace & Defense ETF, suggesting a belief that the market is undervaluing its shares [4][5]. - Over the past 12 months, Lockheed Martin spent around $3 billion on buybacks, indicating a potential to utilize its full capacity to support share prices [5]. Group 2: Elastic - Elastic announced its first-ever buyback program of $500 million, representing 5.4% of its market capitalization of approximately $9.2 billion [6][7]. - The company reported a 20% revenue growth last quarter, its fastest in nearly three years, yet shares are down about 13% in 2025 [6][7]. - Elastic's free cash flow reached $314 million over the last 12 months, nearly double the previous year's $160 million, allowing for significant buyback capacity [7][8]. Group 3: AutoZone - AutoZone increased its buyback authorization by $1.5 billion, bringing its total capacity to approximately $2.13 billion, which is about 3.1% of its $68 billion market capitalization [9][10]. - The company has performed well in 2025 with a 27% increase, and its stock is only down about 6% from its all-time high [10][11]. - Over the last 12 months, AutoZone spent around $1.8 billion on buybacks, indicating a potential for rapid utilization of its new capacity [12].

Market Overview - Major U.S. equities indexes experienced significant declines, with the S&P 500 dropping 2.7%, the Nasdaq falling 3.6%, and the Dow losing 1.9% due to concerns over escalating U.S.-China relations and potential tariff hikes by President Trump [2][7]. Technology Sector - High-flying tech stocks, particularly semiconductor-related firms like Synopsys, Advanced Micro Devices, Microchip Technology, and Teradyne, were among the biggest decliners in the S&P 500 [3][7]. - Nvidia, a prominent player in the AI sector, saw its shares decrease nearly 5% after reaching a new intraday record prior to the negative comments from Trump [3]. Consumer Sector - PepsiCo's shares rose nearly 4%, making it the top performer in the S&P 500, following better-than-expected quarterly results and the appointment of a new chief financial officer. The company's growth in international markets contributed to its strong performance, despite declining volumes in North America [5][7]. Automotive Sector - Auto parts retailers, including AutoZone and O'Reilly Automotive, recovered some losses after a Chapter 11 bankruptcy by supplier First Brands. AutoZone's shares increased by 2.7% following the authorization of a $1.5 billion stock repurchase [6].

Core Insights - Broader equity markets are reaching record highs despite a government shutdown and inflation concerns, with investors expecting the shutdown to be brief and anticipating interest rate cuts by the Fed in 2025 due to weak labor market conditions [1][8] Investment Strategies - Investors are looking to capitalize on the upward movement of stocks by creating portfolios that ensure healthy returns, although the abundance of stocks makes this challenging [2] - Following broker advice is suggested as a strategy, with broker-favored stocks such as Bread Financial (BFH), Delek US Holdings (DK), American Eagle Outfitters (AEO), Advance Auto Parts (AAP), and Archer Daniels Midland Company (ADM) recommended for monitoring [3][8] Stock Screening Methodology - A screening process has been developed to identify stocks based on improving broker recommendations and upward revisions in earnings estimates over the past four weeks, incorporating the price/sales ratio as a valuation metric [4][5] - Screening parameters include: - Top 75 companies with net upgrades in broker ratings over the last four weeks - Top 10 stocks with earnings estimate revisions for the upcoming quarter - Bottom 10% of stocks based on price-to-sales ratio [5][6] Featured Stocks - **Bread Financial (BFH)**: Benefits from data-driven marketing strategies and solid receivables growth in Card Services, with a Zacks Rank of 3 and an average earnings beat of 32% [7][8] - **Delek US Holdings (DK)**: Has a competitive edge in the oil and gas sector due to extensive downstream operations, with a Zacks Rank of 3 and an average earnings beat of 16.1% [9] - **American Eagle Outfitters (AEO)**: Focused on cost-reduction and brand progress, with strategic initiatives aimed at long-term growth and a Zacks Rank of 3 [10][11] - **Advance Auto Parts (AAP)**: Completed a store footprint optimization program and plans to open over 100 new stores, with a Zacks Rank of 3 [11] - **Archer Daniels Midland Company (ADM)**: Focused on global trends and investing in technological capabilities, with a Zacks Rank of 3 and an average earnings beat of 0.05% [12][13]

Group 1 - Investors have taken a bearish stance on AutoZone, with a notable split in sentiment among big-money traders, showing 30% bullish and 60% bearish positions [1][2] - Recent options activity indicates that large investors are targeting a price range for AutoZone between $3100.0 and $4250.0 over the last three months [3] - The volume and open interest trends for AutoZone's options provide insights into liquidity and interest, particularly within the specified strike price range [4] Group 2 - AutoZone operates over 6,500 stores in the U.S. and has a significant international presence, with more than 800 stores in Mexico and over 100 in Brazil, focusing on aftermarket automotive parts [10] - Current expert opinions on AutoZone show a consensus target price of $4769.8, with various analysts maintaining buy ratings and setting target prices ranging from $4499 to $4900 [12][13] - The current trading volume for AutoZone is 56,299, with the stock price at $4174.43, indicating a stable position in the market [15]

Core Insights - O'Reilly Auto Parts (ORLY) has been a strong long-term investment for Right Tail Capital, demonstrating resilience and growth despite market challenges [3][4][12] - The company has a balanced customer mix of "Do It Yourself" (DIY) and "Do It For Me" (DIFM), which positions it well against competitors like AutoZone and Advance Auto Parts [7][14] - O'Reilly's distribution advantages and strong company culture contribute to its competitive edge, allowing it to provide superior service that e-commerce platforms struggle to replicate [9][13] Historical Performance - In 2017, ORLY shares fell 30-50% due to fears of Amazon disrupting the auto parts retail market, but the company rebounded significantly, achieving a ~100x return from its IPO price [5][6] - During the COVID-19 pandemic in March 2020, ORLY shares dropped 40-50%, but the company was able to leverage its proven track record to recover and grow [11] Competitive Positioning - O'Reilly has outperformed its peers by effectively navigating supply chain disruptions and maintaining strong relationships with professional mechanics [12][14] - The company's ability to grow its DIFM business faster than AutoZone, despite AutoZone's established presence, highlights O'Reilly's operational excellence [14] Future Outlook - The ongoing need for auto parts, driven by the increasing age and complexity of vehicles, positions O'Reilly for continued growth [15] - Key drivers of O'Reilly's success include a focus on necessary products, disciplined reinvestment, and a customer-first approach [15][16]

Core Insights - Investors are encouraged to consider stocks like Deckers Outdoor, O'Reilly Automotive, and Lululemon Athletica due to their high return on invested capital (ROIC) in the competitive retail sector [1][3] Group 1: Return on Invested Capital (ROIC) - ROIC is a critical metric in the retail sector, indicating how much operating profit a company generates from every dollar invested [2] - The median ROIC for retail stocks tracked by Citi Research is 17.6%, with Deckers leading at 53%, followed by O'Reilly Automotive at 45% and Lululemon at 45% [3] Group 2: Stock Performance and Market Trends - Shares of Lululemon and Deckers have underperformed the broader market in 2025, both down approximately 50% year-to-date, while the S&P 500 has increased around 14% [4] - Analysts predict a flat profit year for Deckers ending March 2026, but expect around 10% growth in the following fiscal year, with a 25% upside implied by average sell-side analyst price targets [5] Group 3: Brand Performance - Hoka, a brand under Deckers, is noted as one of the fastest-growing in the athletic space, although there are concerns about potential growth slowdown in fiscal year 2026 [6] - O'Reilly Automotive is experiencing significant success, with shares up over 32% due to delayed new car purchases, benefiting from its efficient supply chain despite its stock being valued at nearly 33 times forward earnings, the highest in a decade [7]