Fenimore Asset Management, an investment management company, released its Q4 2025 investor letter. A copy of the same can be downloaded here. The stock market was solid in 2025 but volatile. While investors balanced AI enthusiasm, economic uncertainty, and monetary policy concerns. The summer rally was driven by AI-related spending and economic resiliency, whereas the fourth quarter saw a more volatile market due to valuation pressures and macro uncertainty. Stocks from the large-cap technology and communication services sectors led the market in the quarter, with the S&P 500 Index rising 2.66%. The firm believes that the trend of AI stocks outpacing high-quality stocks is unsustainable. In Q4 2025, Fenimore Small Cap Strategy returned -4.12%, trailing its benchmark, the Russell 2000 Index’s 2.19% return. The underweight exposure to low-quality stocks drove the underperformance in the quarter. Fenimore Dividend Focus Strategy declined -4.41% in Q4 compared to the Russell Midcap Index’s 0.16% return. Furthermore, Fenimore Value Strategy declined -1.17% in Q4 compared to the Russell Midcap Index’s 0.16% return. Investments in the financial and industrial sectors led to the relative underperformance of the Strategy in the quarter. The firm expects mixed market conditions in 2026 as many AI-related stocks look expensive while high-quality companies are trading at multi-year lows, creating opportunities. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Fenimore Asset Management highlighted stocks such as Brown & Brown, Inc. (NYSE:BRO). Brown & Brown, Inc. (NYSE:BRO) was among the key performance detractors in Fenimore Value Strategy during the quarter. Headquartered in Daytona Beach, Florida, Brown & Brown, Inc. (NYSE:BRO) is an insurance broker that operates in Retail, Programs, Wholesale Brokerage, and Services segments. On January 15, 2026, Brown & Brown, Inc. (NYSE:BRO) stock closed at $79.75 per share. One-month return of Brown & Brown, Inc. (NYSE:BRO) was -0.87%, and its shares lost 24.70% of their value over the last 52 weeks. Brown & Brown, Inc. (NYSE:BRO) has a market capitalization of $27.122 billion.
Fenimore Asset Management stated the following regarding Brown & Brown, Inc. (NYSE:BRO) in its fourth quarter 2025 investor letter:
“Our underperformance versus the Russell Midcap was attributable to our choice of investments in the financial and industrial sectors. Our allocation to those sectors was a net neutral. Brown & Brown, Inc. (NYSE:BRO) and Fastenal Co. (FAST) weighed most heavily on our relative performance. BRO is a commercial insurance broker that serves small and midsized companies. Their organic growth rates slowed as property casualty rates declined. Investors also reacted to a decline in pre-tax margins, largely due to integration costs from a recent merger.”
Brown & Brown, Inc. (NYSE:BRO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 44 hedge fund portfolios held Brown & Brown, Inc. (NYSE:BRO) at the end of the third quarter, compared to 60 in the previous quarter. While we acknowledge the risk and potential of Brown & Brown, Inc. (NYSE:BRO) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Brown & Brown, Inc. (NYSE:BRO) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Brown & Brown, Inc. (NYSE:BRO) and shared the list of oversold fundamentally strong stocks to buy. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
