Group 1: Fund Performance - Brown Brothers Harriman's BBH Select Series - Mid Cap Fund decreased by -0.9% in Q3 2025, underperforming the Russell Midcap Index which returned 5.3% [1] - Year-to-date, the fund has a total return of -1.8%, compared to the Index's 10.4% [1] - The third quarter saw a continuation of the low-quality rally that began late last year, gaining momentum throughout 2025 [1] Group 2: Shift4 Payments, Inc. Overview - Shift4 Payments, Inc. (NYSE:FOUR) experienced a one-month return of -8.58% and a 52-week decline of 34.27%, closing at $66.90 per share with a market capitalization of $5.929 billion on December 09, 2025 [2] - In Q3 2025, Shift4 Payments was one of the largest detractors to the fund's performance, declining -21.9% during the quarter [3] - The company specializes in integrated payment processing solutions for the hospitality sector, including restaurants and lodging [3] Group 3: Financial Performance and Guidance - Shift4 Payments slightly missed consensus estimates on volumes, EBITDA, and EPS, while beating on net revenue and free cash flow [3] - The company raised its annual guidance for net revenue, excluding the recent acquisition of Global Blue, but the overall guidance was below consensus estimates for volumes [3] - Shift4 continues to expect over 20% organic net revenue growth for the year and is tracking toward the high end of its intermediate-term guidance issued in January [3] Group 4: Hedge Fund Interest - Shift4 Payments, Inc. was held by 45 hedge fund portfolios at the end of Q3 2025, down from 55 in the previous quarter [4] - While the potential of Shift4 Payments is acknowledged, certain AI stocks are considered to offer greater upside potential with less downside risk [4]

Core Viewpoint - Shift4 Payments, Inc. (NYSE:FOUR) is identified as a promising growth stock despite a recent price target reduction by analysts, indicating potential investment opportunities in the company [1]. Financial Performance and Guidance - D.A. Davidson analyst Peter Heckmann lowered the price target for Shift4 Payments from $124 to $114 ahead of the fiscal third-quarter earnings announcement scheduled for November 6, 2025 [1][2]. - The company anticipates gross revenue less network fees for the third quarter to be approximately $590 million, with adjusted EBITDA expected to be around $290 million [2]. - For the full year, management maintains a volume range of $200 billion to $220 billion and expects gross revenue less network fees between $1.965 billion and $2.035 billion [3]. - The analyst expects the company to meet or slightly exceed these forecasts and anticipates that management will affirm or potentially increase the full-year guidance [3]. Strategic Focus - Investors expect Shift4 Payments to slow down additional acquisitions until mid-2026, emphasizing the need to focus on integrating recent deals [3]. - The company provides software and payment processing solutions across the United States, supporting various payment methods including credit cards, mobile wallets, and alternative payment options [4].

Market Overview - Mid cap growth equities experienced modest gains in Q3, with the Russell Midcap Growth Index returning 2.8%, lagging behind the Russell Midcap Value Index at 6.2% and the Russell Midcap Index at 5.3% [3] - The U.S. Federal Reserve's rate cut in September contributed to easing monetary policy, benefiting rate-sensitive sectors and renewing interest in cyclical and innovation-led areas [3] Investor Sentiment - Investor sentiment improved due to the passage of the One Big Beautiful Bill and progress on trade agreements, reducing policy uncertainty and enabling companies to execute delayed strategic decisions [4] - Earnings estimates stabilized, particularly in technology and AI-related sectors, despite ongoing challenges in non-residential construction and discretionary segments [4] Portfolio Performance - The ClearBridge Mid Cap Growth Strategy outperformed its benchmark in Q3, driven by stock selection in IT, consumer staples, and healthcare sectors, while consumer discretionary and financials sectors slightly detracted from performance [5] Sector Contributions - In the IT sector, AppLovin (APP) and Monolithic Power Systems (MPWR) were standout performers, with AppLovin benefiting from strong earnings and optimism around its e-commerce business [6] - Consumer staples saw positive contributions from Performance Food Group (PFGC) and Casey's General Stores (CASY), both benefiting from strong operational performance [7] - The consumer discretionary sector faced challenges, particularly with Chipotle Mexican Grill (CMG) and Wingstop (WING) experiencing declines due to competitive pressures and softer spending trends [8] - Financials sector was a modest drag on performance, with Tradeweb Markets (TW) and Corpay facing challenges from macro volatility and company-specific issues [9] Portfolio Positioning - New positions were initiated in Roblox, benefiting from improved growth dynamics and advertising opportunities, and APi Group, which is well-positioned in safety and industrial services [10][11] - Exited position in Deckers Outdoor (DECK) due to increasing competitive pressures in the sneaker market [12] Outlook - Leadership within mid growth stocks remains selective, with a few companies rewarded for differentiated technology and strong pipelines, while others struggle with demand and competition [13] - Focus remains on identifying businesses with secular growth drivers across technology, healthcare, and industrials sectors [14] - Near-term market uncertainty is expected to persist, but the strategy is positioned to benefit from companies sustaining durable growth in earnings and cash flow [15] Portfolio Highlights - The ClearBridge Mid Cap Growth Strategy had positive contributions across seven of the 11 sectors, with IT and healthcare being the leading contributors [16] - Stock selection in IT, consumer staples, healthcare, and energy sectors contributed positively, while consumer discretionary and financials sectors weighed on performance [17] - Individual stock contributions included AppLovin, United Rentals (URI), and Performance Food, while detractors included Chipotle Mexican Grill and Tradeweb Markets [18]