Wedgewood Partners, an investment management company, released its fourth-quarter 2025 investor letter. The firm anticipates stronger market volatility in the coming years and has moderated its enthusiasm. A copy of the letter can be downloaded here. The Wedgewood Composite returned -1.8% (net) in the fourth quarter compared to the S&P 500’s 2.7%, the Russell 1000 Growth Index’s 1.1%, and the Russell 1000 Value Index’s 3.8% returns. YTD, the Composite gained 4.3% compared to 17.9%, 18.6%, and 15.9% returns for the indexes, respectively. Wedgewood Partners’ focus on high-quality stocks has historically worked since 1992, but not in 2025. The letter highlighted poor stock selection, the portfolio’s strong past performers due for valuation correction, and being structurally underweight in AI stocks drove the underperformance. The letter noted that in 2026, crowded AI investments and stretched valuations create pressure on prudent investment decisions. In addition, you can check the Fund’s top 5 holdings to determine its best picks for 2025.
In its fourth-quarter 2025 investor letter, Wedgewood Partners highlighted Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as a key performance contributor. 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 16.75%, and its shares gained 61.89% over the last 52 weeks. On January 16, 2026, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stock closed at $342.40 per share, with a market capitalization of $1.776 trillion.
Wedgewood Partners 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) also contributed to performance during the quarter. Broadcom’s and Nvidia’s CEOs have referred to the Company as a “precious source” and “the pride of the world” in silicon manufacturing, as the Company continues to execute lawlessly on its leading-edge node progression and capacity build-out, enabling the AI era by manufacturing nearly every compute accelerator (including GPUs) being marketed. The Company’s advanced nodes allow accelerator designers greater flexibility to increase performance while limiting power requirements, a valuable proposition in an increasingly power-constrained compute infrastructure industry. Historically, mobile devices drove most of TSMC’s revenue growth. More recently, high-performance computing (HPC) now driven most of the business. HPC revenues have doubled to more than $65 billion over the past six quarters, more than triple since late 2021. The Company continues to demonstrate pricing power, which should help drive excellent returns on capital as they likely accelerate their capacity buildout over the next several years.”
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 best strong buy growth stocks to buy according to hedge funds. 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.
