Mar Vista Investment Partners, LLC, an investment management company, released its “Mar Vista U.S. Quality Strategy” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. US equities experienced a strong momentum in 2025 and marked their second consecutive year of double-digit gains. The market witnessed one of the fastest recoveries following its dip into bear territory in April. Market leadership continued to narrow as Mega-cap stocks and AI-driven companies dominated the landscape. Against this backdrop, The Mar Vista’s U.S. Quality strategy reported +0.20% net-of-fees gains in Q4 2025 vs. the Russell 1000® Index’s +2.41% return and the S&P 500® Index’s +2.65% return. Stock selection in the communication services, consumer discretionary, and financials sectors was favorable to its performance, while stock selection in information technology, materials, and healthcare detracted from its performance. The letter also shared that, in 2026, markets will need to strike a balance between strong fundamentals and increasing economic uncertainties. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Mar Vista U.S. Quality Strategy highlighted stocks such as Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures, packages, tests, and sells integrated circuits and other semiconductor devices. The one-month return for Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was 19.59%, and its shares gained 60.16% over the last 52 weeks. On January 13, 2026, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stock closed at $331.21 per share, with a market capitalization of $1.72 trillion.
Mar Vista U.S. Quality Strategy stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its fourth quarter 2025 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the dominant manufacturer of semiconductors for the world’s leading fabless chip designers including NVIDIA, Apple, Broadcom, and others. TSM is the world’s preeminent semiconductor foundry due to its leadership position in producing the most advanced chips that power the world’s most sophisticated supercomputers, personal computers, and mobile devices. It is also one of only two manufacturers that operates at the leading edge of semiconductor process technology. This technological leadership, reinforced by scale economies, proprietary process know-how, and decades of accumulated manufacturing expertise, creates a formidable competitive moat that is increasingly difficult for other foundries to replicate. As a result, TSM earns structurally higher gross margins than its peers through a combination of technology-driven pricing power and superior manufacturing efficiency.
TSM has also benefited from ongoing consolidation within the semiconductor industry, which has accelerated demand for integrated systems built on the most advanced process nodes. At the same time, the rapid growth of artificial intelligence, high-performance computing, and the Internet of Things is driving sustained demand for leading-edge semiconductors, as computing becomes increasingly intelligent and interconnected. We believe the global arms race to develop artificial general intelligence will support multiple years of robust growth for foundries with true leading-edge capabilities. TSM is uniquely positioned to benefit regardless of which fabless chip architecture ultimately dominates high-performance computing, as its customers span the full spectrum of leading AI, CPU, GPU, and custom accelerator designs.
Semiconductor manufacturing is inherently cyclical and capital intensive, yet we believe these factors further strengthen TSM’s moat rather than weaken it. The escalating cost and complexity of advanced-node fabrication requires tens of billions of dollars in sustained annual capital expenditures, which raises the barriers to entry and constrains credible competition. During industry downturns, TSM’s scale, balance sheet strength, and customer entrenchment should allow it to continue investing through the cycle, widening the technology gap versus smaller or less well capitalized peers. We believe these structural advantages should enable TSM to generate returns on invested capital well above its cost of capital across the business cycle and to compound intrinsic value at rates meaningfully in excess of broader market growth over our investment horizon.”
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is in 9th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 194 hedge fund portfolios held Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the end of the third quarter, compared to 187 in the previous quarter. In the third quarter of 2025, Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) revenue increased 6% sequentially in NT. While we acknowledge the risk and potential of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) 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 Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and shared the list of AI stocks investors are watching closely. 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.
