Portfolio Manager Commentary

Q1 Market and Portfolio Review

In the first quarter of 2025, equity markets finished lower after ending 2024 near all-time highs across most broad indices. As we highlighted in our Q4 letter, the market was closely watching how campaign promises and post-election rhetoric around various priorities could impact the trajectory of the US economy over the next four years. Shortly after President Trump’s inauguration on Jan 20^th, the new administration unleashed a flurry of new initiatives that quickly created uncertainty for the global economy, causing market volatility and weak equity performance in late February and throughout March. Key areas of focus include DOGE spending cuts, immigration policy, geopolitical strategy, and tariff implementation. It was our assumption that moving past the election outcome last November would allow the market to refocus on the path of the economy and the direction of earnings estimates. However, uncertainty around the near-term economic impact of these initiatives has rapidly shifted investor sentiment. Now there is a belief that growth is slowing, recession probabilities have risen, and inflation could become problematic once again. NCG has similar concerns, and we are closely monitoring each development and the potential impact on our portfolio holdings. That being said, our experienced team has been investing in growth companies for over 26 years, and we have invested through many challenging periods over that time. While near-term performance can be impacted in these environments, we believe in the long-term growth of the US and global economy, and we believe the clouds will eventually part. Our philosophy, process and team remain consistent, and we continue to invest in what we believe are the fastest growing and highest quality companies in America.