Investment management company Vulcan Value Partners recently released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. All the strategies of Vulcan Value Partners delivered positive results in the year. The Large Cap Composite (Net) returned -1.5% in Q4 and 7.9% YTD, the Small Cap Composite (Net) gained 3.2% in Q4 and 9.5% YTD, The Focus Composite (Net) retuned 0.1% in Q4 and 7.1% YTD, Focus Plus Composite (Net) returned 0.1% in Q4 and 6.2% YTD and the All-Cap Composite (Net) returned 1.3% in Q4 and 10.7% YTD. Despite overvalued markets, the firm improved its price-to-value ratios while still achieving positive returns, prioritizing safety and long-term gains over short-term performance. This situation echoes the late 1990s dot-com bubble, where hype and high valuations led to a crash, and today’s AI disruptions seem to mirror that pattern, with investors risking overpaying for promising businesses. The firm is addressing such situations by sticking to its investment discipline. For more information on the firm’s best picks in 2025, please check its top five holdings. In addition, please check the firm’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Vulcan Value Partners highlighted Medpace Holdings, Inc. (NASDAQ:MEDP). Medpace Holdings, Inc. (NASDAQ:MEDP) is a healthcare company that offers clinical research-based drug and medical device development services. Medpace Holdings, Inc. (NASDAQ:MEDP) shares traded between $250.05 and $628.92 over the past 52 weeks. On January 22, 2026, Medpace Holdings, Inc. (NASDAQ:MEDP) stock closed at $606.27 per share. One-month return of Medpace Holdings, Inc. (NASDAQ:MEDP) was 6.82%, and its shares gained 0.18% of their value over the last three months. Medpace Holdings, Inc. (NASDAQ:MEDP) has a market capitalization of about $17.078 billion.
Vulcan Value Partners stated the following regarding Medpace Holdings, Inc. (NASDAQ:MEDP) in its fourth quarter 2025 investor letter:
“It is incredible to have a portfolio with a weighted average price to value ratio in the mid-50’s in today’s environment. The economy is healthy and resilient. Interest rates are headed down. The majority of our MVP list is overvalued, as is usually the case. The broader market, dominated by very large cap companies, is certainly not cheap on any metric. Yet, we have a portfolio trading at a large discount to our estimate of intrinsic value. Could our values be wrong? Yes, but our track record, supported by comps, suggests that we are reasonably good at valuation. We use the same math for every company we value. The same math that says our discounted companies are discounted is the same math that says the overvalued companies we do not own really are overvalued.
Medpace Holdings, Inc. (NASDAQ:MEDP) is a great example. The company is competitively entrenched, produces robust amounts of free cash flow, has a strong balance sheet, and its management team excels both as operators and capital allocators. Medpace’s value has steadily compounded since we first purchased it in Small Cap in 2021. Its stock price began to underperform in 2024 and continued to decline during the first half of 2025. The company’s growth had slowed, which we believed would be a temporary phenomenon. It continued to produce strong free cash flow and our value was moving north while its stock price was moving south. During the tariff tantrum we were able to purchase it in Large Cap and All Cap. We also added to our position in Small Cap, where we have owned it successfully for many years. Medpace’s growth accelerated during the second quarter, catching Wall Street by surprise. Its stock rose over 40% the day they reported earnings. For the year, Medpace’s stock is up over 73%. During the first 6 months of the year, Medpace used its strong balance sheet and free cash flow to repurchase over 8% of its shares at approximately 50% of our estimate of intrinsic value. Because of the company’s brilliant capital allocation decisions, our estimated value per share increased approximately 29% in a single quarter! In effect, every dollar that the company spent on share repurchases gave us a 100% return because they were purchasing at half of our estimated fair value.
Medpace hurt our results in the first half of 2025. Obviously, it has been a major contributor to our performance this year, as it has over our long-term holding period. We believe that our portfolios are full of “Medpaces.” We cannot control when we will be rewarded, but as long-term investors, we can control the types of businesses we own and the price we pay for them. While there are always one or two disappointments, we believe that our companies are compounding their values at attractive rates and that their prices do not reflect their fair values.”
Medpace Holdings, Inc. (NASDAQ:MEDP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held Medpace Holdings, Inc. (NASDAQ:MEDP) at the end of the third quarter, which was 42 in the previous quarter. Medpace Holdings, Inc. (NASDAQ:MEDP) reported revenue of $659.9 million in the third quarter 2025, representing an increase of 23.7% year-over-year. While we acknowledge the risk and potential of Medpace Holdings, Inc. (NASDAQ:MEDP) 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 Medpace Holdings, Inc. (NASDAQ:MEDP) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Medpace Holdings, Inc. (NASDAQ:MEDP) and shared Wasatch Small Cap Growth Strategy’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.
