Fenimore Asset Management’s Q4 2025 Investor Letter

Fenimore Asset Management, an investment management company, released its Q4 2025 investor letter. The stock market was solid in 2025 but volatile, as 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 by 4.41% in Q4 compared to the Russell Midcap Index’s 0.16% return. Furthermore, Fenimore Value Strategy declined by 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.

A copy of Fenimore Asset Management’s Q4 2025 investor letter can be downloaded here.