Wedgewood Partners

#### I. Institutional Overview David Rolfe, the Chief Investment Officer of Wedgewood Partners, is widely recognized in the investment community as a quintessential practitioner of "Focused Quality" investing. The 13F report for the fourth quarter of 2025 provides a transparent window into the psychological portrait and strategic maneuvers of an institution that prioritizes high-conviction bets over broad market diversification. With a reported portfolio value of approximately **$535.49 million** and a lean roster of only **21 holdings**, Wedgewood Partners exemplifies a "boutique" investment style where every single position is expected to carry significant weight and contribute meaningfully to the overall performance. The institutional scale of Wedgewood, while modest compared to multi-billion-dollar hedge fund giants, allows for a level of agility and concentration that is often lost in larger AUM (Assets Under Management) structures. A portfolio of 21 stocks suggests a rigorous screening process where only the "best of the best" ideas survive. In the world of institutional finance, a holding count of fewer than 30 typically signals a **concentrated investment philosophy**. This approach is rooted in the belief that true alpha is generated by deeply understanding a handful of exceptional businesses rather than spreading capital across a wide array of average companies. For David Rolfe, the goal is not to mimic the index but to outperform it by identifying companies with sustainable competitive advantages, strong pricing power, and superior management teams. Analyzing the scale trend, the portfolio value of **$535.49 million** reflects a stable yet disciplined capital base. Unlike "hot money" funds that experience massive inflows and outflows based on short-term performance, Wedgewood’s structure suggests a long-term client base that aligns with Rolfe’s multi-year investment horizon. The psychological portrait that emerges from this data is one of **patience and conviction**. This is not an institution that trades for the sake of trading. Many of the core holdings, such as Alphabet (GOOGL), Apple (AAPL), and Visa (V), have been in the portfolio for over a decade. This "holding age" is a critical metric; it reveals a "buy and hold" mentality that is increasingly rare in an era of high-frequency trading and algorithmic execution. However, the Q4 2025 report also reveals a period of **active portfolio optimization**. While the core philosophy remains unchanged, the institution is clearly engaged in "pruning the garden." The reduction in long-term winners like Alphabet and the massive retreat from PayPal (PYPL) indicate a willingness to admit when a thesis has changed or when valuations have outpaced fundamental growth. Conversely, the introduction of new positions like Chubb Limited (CB) and Amazon (AMZN) suggests a tactical rotation into areas where the institution sees fresh "quality-at-a-reasonable-price" (QARP) opportunities. In summary, David Rolfe’s Wedgewood Partners enters the final stretch of 2025 as a **highly focused, quality-centric powerhouse**. The institution is currently in a state of "strategic refinement"—maintaining its massive bets on the semiconductor and digital platform giants that have defined the last decade, while simultaneously diversifying into high-quality financials and industrials to hedge against shifting macro environments. The concentration level (Top 10 holdings representing a vast majority of the AUM) underscores a high-risk, high-reward profile that relies heavily on the accuracy of Rolfe’s fundamental analysis. For an investor with only 21 stocks, there is no room for "closet indexing"; every move is a statement of intent. #### II. Sector Allocation Analysis The sector allocation of Wedgewood Partners in Q4 2025 serves as a macro compass, revealing the institution's underlying judgments regarding the economic cycle and industry-specific growth trajectories. By examining the distribution of the **$535.49 million** portfolio, we can discern a clear preference for sectors that offer a blend of secular growth and structural resilience. **Table 2.1: Sector Allocation and Weights** | Sector | Weight (%) | Estimated Trend/Sentiment | | :--- | :--- | :--- | | **Technology** | 34.09 | Core Growth Engine / Selective Trimming | | **Communication Services** | 18.30 | High Conviction / Profit Taking | | **Consumer Discretionary** | 16.21 | Tactical Expansion (New Entry: AMZN) | | **Financials** | 14.81 | Defensive Value (New Entry: CB) | | **Industrials** | 11.20 | Structural Growth (Additions: ODFL, MSI) | | **Healthcare** | 5.40 | Niche Allocation / Underweight | **2.1 Concentration and Macro Strategy** The most striking feature of the sector layout is the **extreme concentration in the top three sectors**. Technology, Communication Services, and Consumer Discretionary collectively account for **68.6%** of the total portfolio. This concentration indicates a "Growth-Heavy" macro judgment. David Rolfe is essentially betting that the digital economy—encompassing semiconductors, cloud computing, digital advertising, and e-commerce—will continue to be the primary driver of global wealth creation. However, the **34.09%** weight in Technology, while dominant, is not a blind bet. The data shows a nuanced approach. The institution is heavily exposed to the "foundry" level of tech through TSM (Taiwan Semiconductor) but has begun to trim exposure in "legacy" hardware and software giants like Apple and Microsoft. This suggests a shift from "broad tech beta" to "specific AI-enablement alpha." **2.2 Sector Rotation: From Digital Platforms to Real-World Infrastructure** A significant insight from this quarter is the rotation toward **Financials (14.81%)** and **Industrials (11.20%)**. The addition of Chubb Limited (CB) in the Financials sector is a classic defensive move. In an environment of potential economic volatility or persistent interest rate fluctuations, high-quality insurance companies like Chubb offer "float" and pricing power that tech companies might lack. Similarly, the increased weight in Industrials, driven by additions to Old Dominion Freight Line (ODFL) and Motorola Solutions (MSI), signals a belief in the "reshoring" or "infrastructure upgrade" theme. Motorola Solutions, in particular, represents a niche in public safety and mission-critical communications—a business model with extremely high switching costs and government-backed revenue streams. This move suggests that Wedgewood is looking for "certainty" in an uncertain macro environment, moving some capital away from the volatile consumer-facing tech space into the more stable B2B and B2G (Business-to-Government) industrial space. **2.3 The Consumer Discretionary Pivot** The **16.21%** allocation to Consumer Discretionary is particularly interesting given the exit of Pool Corporation (POOL) and the new entry into Amazon (AMZN). This represents a "quality upgrade" within the sector. Pool Corp is a cyclical business tied to housing and discretionary home spending, which may face headwinds in a high-interest-rate environment. Amazon, conversely, is a multi-headed beast with a dominant cloud business (AWS) and a retail arm that has become an essential utility for many households. By swapping a niche cyclical player for a global platform leader, Rolfe is increasing the "durability" of his consumer exposure. **2.4 Insights into the Macroeconomic Cycle** Based on this allocation, we can infer that Wedgewood Partners is positioning for a **"Late-Cycle" or "Soft Landing" scenario**. The heavy tech weight captures the ongoing AI revolution, while the growing Financial and Industrial weights provide a buffer against inflation or a slowdown in consumer spending. The relatively low weight in Healthcare (**5.4%**) and the reduction in Zoetis (ZTS) suggest that the institution finds better "growth-at-reasonable-price" opportunities in other sectors, or perhaps views the current valuation of healthcare "quality" stocks as less attractive than the tech or industrial alternatives. The overall strategy is one of **"Aggressive Defense."** The portfolio remains offensive through its tech and communication holdings, but the internal plumbing is being re-routed toward companies with stronger balance sheets and more predictable cash flows. This is the hallmark of an institutional manager who is wary of market exuberance but refuses to abandon the secular growth themes that have historically generated outsized returns. #### III. Top 10 Holdings Deep Dive The Top 10 holdings of Wedgewood Partners represent the "ballast stones" of the portfolio, accounting for a staggering **69.67%** of the total reported value. This level of concentration means that the performance of these ten companies effectively dictates the success or failure of the entire fund. **Table 3.1: Top 10 Holdings Detail** | Rank | Ticker | Company Name | Market Value | Weight (%) ---