1Q2025 - U.S. SMID Company Growth Commentary
During the quarter, market optimism following the Trump election quickly gave way to fear and uncertainty due to concerns about new cost-cutting measures and trade policies, resulting in heightened volatility.
- The Polen Capital U.S. SMID Company Growth Composite Portfolio delivered -12.38% gross of fees and -12.65% net of fees for the quarter, underperforming the Russell 2500 Growth Index’s -10.80% return.
- The top contributors to the Portfolio’s relative performance were Goosehead Insurance, Paycom Software, and Progyny. The top absolute contributors were Progyny, Goosehead Insurance, and Dutch Bros.
- The most significant detractors from the quarter’s performance, both relative and absolute, were Globant, e.l.f. Beauty, and Revolve Group.
- We initiated new positions in SAIA, Construction Partners, Comfort Systems USA, Wingstop, and Manhattan Associates and added to several existing positions.
- We eliminated positions in Charles River Labs, Etsy, Yeti, Align Technology, and Booz Allen Hamilton, and trimmed several existing positions. Many sells and trims were in the Consumer Discretionary sector, where we see more vulnerability to tariff uncertainty and economic dislocation.
- While we cannot control short-term market movements, we respond with disciplined research, patience, and rational decision-making, regularly stress-testing portfolios under different policy scenarios, thoughtfully exiting select investments, and identifying new opportunities amid volatility.