Performance Summary - Parnassus Mid Cap Fund achieved a return of 1.17% in Q4 2025, outperforming the Russell Midcap Index which returned 0.16% [1] - Year-to-date, the Fund returned 12.85%, compared to the index's 10.60% [1] - The Fund's performance was bolstered by investments in the Information Technology sector and Utilities [1] Outlook - The Fund is optimistic about mid-cap stocks driving market growth in 2026, contingent on continued economic expansion beyond artificial intelligence [1] - In case of a market downturn, the Fund believes its portfolio of financially solid companies will provide downside protection [1] Pool Corporation Analysis - Pool Corporation (NASDAQ:POOL) is a leading distributor of swimming pool supplies with a market capitalization of $7.38 billion [2] - The stock closed at $200.49 on March 30, 2026, with a one-month return of -15.95% and a 52-week decline of 37.52% [2] - Parnassus Mid Cap Fund exited its position in Pool Corporation due to high valuation relative to growth potential amid sluggish demand in the pool market [3] Hedge Fund Interest - Pool Corporation was held by 45 hedge fund portfolios at the end of Q4 2025, an increase from 41 in the previous quarter [4] - Despite its potential, the Fund believes that certain AI stocks present greater upside and lower downside risk compared to Pool Corporation [4] - Pool Corporation's total sales in Q4 2025 were $982 million, just 1% below the previous year's level [4]

Group 1: Moody's - Moody's shares have declined 16% year to date, but the company's fundamentals indicate this may be an overreaction [2][4] - In Q4 2025, Moody's revenue increased by 13% year over year to $1.89 billion, with non-GAAP earnings per share rising to $3.64 from $2.62 [4][10] - The "Moody's Investors Service" segment saw a 17% revenue growth, driven by a strong corporate finance environment and record-high infrastructure finance issuance [5][6] - Moody's has a conservative payout ratio of about 29%, allowing for future dividend increases, and recently raised its dividend by 10% to $1.03 per share [8][9] - The stock trades at a price-to-earnings ratio of about 31, reflecting a premium valuation for a high-margin business with 20% growth in adjusted earnings per share [10] Group 2: Pool Corp - Pool Corp's shares are down 11% year to date, facing challenges from high interest rates and cautious consumer spending affecting new pool construction [2][11] - In Q4 2025, Pool Corp's revenue declined approximately 1% year over year to $982.2 million, with earnings per share falling 13% to $0.85 [12][17] - The company maintains a payout ratio of roughly 45%, ensuring the security of its dividend, which was recently increased by 4% to $1.25 per share [16] - Pool Corp's business relies on non-discretionary maintenance products, providing a stable cash flow even in economic downturns, with improving sales trends for discretionary products noted [15][17] - The stock offers a dividend yield of approximately 2.4% and trades at a price-to-earnings ratio of 19, which is considered attractive given the current cyclical downturn [17]

Core Insights - Pool Corporation, based in Covington, Louisiana, is the leading independent distributor of swimming pool supplies and related leisure products, with a market cap of $9.5 billion and operations in nearly 450 locations serving over 125,000 customers globally [1] Financial Performance - Pool stock has declined by 35.9% over the past 52 weeks and 4.5% year-to-date, significantly underperforming the S&P 500 Index, which gained 11.7% over the same period [1] - The company reported a 1% year-over-year drop in sales for Q4 2025, totaling $982.2 million, which missed estimates, while EPS fell from $0.97 to $0.84, also below forecasts [5] - For the full fiscal year 2026, analysts expect an EPS of $11, reflecting a 2.5% year-over-year increase, although the company has a mixed earnings surprise history [6] Analyst Ratings - The consensus rating for Pool stock is "Moderate Buy," with five analysts recommending "Strong Buy," nine "Holds," and one "Moderate Sell" [6] - Wells Fargo analyst Sam Reid raised the price target for Pool Corp. to $275 from $250 while maintaining an "Equal-Weight" rating, indicating a modestly improved valuation outlook [7]

Company Overview - Pool Corporation, based in Covington, Louisiana, is the world's leading independent distributor of swimming pool supplies, equipment, and related leisure products, with a market cap of $8.9 billion and operations in hundreds of locations serving over 125,000 wholesale customers globally [1]. Market Position - Pool Corporation is classified as a mid-cap stock, fitting the description of companies valued between $2 billion and $10 billion, with extensive operations across the U.S., Canada, Mexico, Europe, and Australia [2]. Stock Performance - Pool's stock has experienced a significant decline, with prices dropping 35.9% from its 52-week high of $374.74 on March 10, and a 26.3% decrease over the past three months, underperforming the Industrial Select Sector SPDR Fund's (XLI) 3.4% increase during the same period [3]. - Year-to-date, Pool's stock has fallen 29.5%, and over the past 52 weeks, it has decreased by 35%, contrasting with XLI's 19% surge in 2025 and 13.8% returns over the past year [4]. Recent Financial Results - Following the release of better-than-expected Q3 results on October 23, Pool's stock saw a slight uptick, maintaining momentum from Q2 with top-line growth and margin expansion [5]. - For Q3, Pool's revenue increased by 1.3% year-over-year to approximately $1.5 billion, surpassing market expectations by 14 basis points, while adjusted EPS rose 4% year-over-year to $3.39, exceeding consensus estimates by 30 basis points [6]. Competitive Analysis - Compared to its peer Leslie's, Inc., which saw a 94.6% decline in 2025 and a 95.1% drop over the past 52 weeks, Pool has notably outperformed [7]. - Among 15 analysts covering Pool stock, the consensus rating is a "Moderate Buy," with a mean price target of $329.27, indicating a potential upside of 37% from current price levels [7].