Laughing Water Capital, an investment management company, released its fourth-quarter 2025 investor letter. In the quarter, Laughing Water Capital returned ~6.8%, bringing the full-year returns to ~3.9% net of fees and expenses. In comparison, the SP500TR and R2000 returned approximately 2.7% and 2.2%, respectively, in the quarter, and finished the year up by 17.9% and 12.8%, respectively. A copy of the letter can be downloaded here. The Fund outperformed the indexes last year, but it has lagged behind them in the current year. However, what really matters is the cumulative returns over the long run, as volatility tends to smooth out over time. The Portfolio is well-positioned in this regard, delivering strong results on a cumulative basis since inception and returned about 400%, vs ~332% for the SP500TR and ~175% for our most relevant benchmark, the R2000. In addition, you can check the Strategy’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Laughing Water Capital highlighted stocks such as Liquidia Corporation (NASDAQ:LQDA). Liquidia Corporation (NASDAQ:LQDA) is a biopharmaceutical company that develops, manufactures, and commercializes various products for unmet patient needs in the United States. The one-month return for Liquidia Corporation (NASDAQ:LQDA) was 12.34%, and its shares gained 200.93% over the last 52 weeks. On January 15, 2026, Liquidia Corporation (NASDAQ:LQDA) stock closed at $38.79 per share, with a market capitalization of $3.375 billion.
Laughing Water Capital stated the following regarding Liquidia Corporation (NASDAQ:LQDA) in its fourth quarter 2025 investor letter:
“Liquidia Corporation (NASDAQ:LQDA) – Liquidia was first introduced anonymously in the YE’24 letter to LPs. At the time, the company was a pre-approval biopharmaceutical company that was mired in patent lawsuits filed by an incumbent (United Therapeutics – UTHR) that was seeking to defend their market position versus an upstart that seems to have a superior product. Since that time, Liquidia’s drug – Yutrepia – has been approved for treatment of pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD). Early sales of Yutrepia have crushed expectations as patients – and prescribers – seem to prefer Yutrepia vs. the incumbent due to superior delivery and tolerability. Between appreciation and adding to the position as the company reached important milestones, LQDA has grown into a top position.
Liquidia has won many patent battles vs. United Therapeutics already, but the war is not yet won. United Therapeutics has a $22B market cap, and much of that is at risk due to Liquidia’s advances. They are thus well incentivized to keep fighting. As such, the patent lawsuits continue to linger, with a resolution of the latest round expected any day. My reading of the materials and discussions with attorneys lead me to believe that the odds for success are heavily tilted in Liquidia’s favor. Importantly however, at this point the remaining questions are almost entirely tied only to the use of Yutrepia to treat PH-ILD. In other words, it seems that Liquidia will be able to continue to sell Yutrepia in some form regardless of the outcome of the still pending patent conflict. …” (Click here to reach the full text)
Liquidia Corporation (NASDAQ:LQDA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Liquidia Corporation (NASDAQ:LQDA) at the end of the third quarter, which was 43 in the previous quarter. While we acknowledge the risk and potential of Liquidia Corporation (NASDAQ:LQDA) 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 Liquidia Corporation (NASDAQ:LQDA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Liquidia Corporation (NASDAQ:LQDA) and shared Arquitos Capital Management’s views on the company in the previous quarter. 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.
