Brown Capital Management, an investment management company, released its fourth quarter 2025 investor letter for “The Brown Capital Management Small Company Fund”. A copy of the letter can be downloaded here. In the fourth quarter of 2025, the Small Company Fund (Investor shares) fell 1.50%, behind the Russell 2000® Growth index’s 1.22% gain. Real estate and telecommunications businesses led the benchmark’s performance for the quarter. The Fund was down 11.46% in 2025, significantly lagging the Index’s 13.01% return. The firm’s investment decisions are driven by company fundamentals, and its holdings performed well in terms of revenue and earnings growth in 2025. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, The Brown Capital Management Small Company Fund highlighted stocks like Loar Holdings Inc. (NYSE:LOAR). Loar Holdings Inc. (NYSE:LOAR) is an aerospace and defense components manufacturer for aircraft and aerospace and defense systems. On February 20, 2026, Loar Holdings Inc. (NYSE:LOAR) stock closed at $67.14 per share. One-month return of Loar Holdings Inc. (NYSE:LOAR) was -6.61%, and its shares lost 0.97% over the past 52 weeks. Loar Holdings Inc. (NYSE:LOAR) has a market capitalization of $6.286 billion.
The Brown Capital Management Small Company Fund stated the following regarding Loar Holdings Inc. (NYSE:LOAR) in its fourth quarter 2025 investor letter:
“In the quarter, we added four companies to the Fund—AvePoint Inc. (AVPT), Loar Holdings (LOAR), PDF Solutions (PDFS) and Veracyte (VCYT). Loar Holdings Inc. (NYSE:LOAR) is a niche aerospace and defense components manufacturer with a differentiated focus on the aftermarket, which accounted for more than 50% of revenue in fiscal year 2024. About 85% of Loar’s product portfolio is proprietarily designed, providing meaningful pricing power and supporting strong profitability, with 22% GAAP operating margin and a clear path for further expansion. The company benefits from attractive industry tailwinds. Commercial aerospace is still supply-constrained at the OEM level, while global air traffic is growing at or above global GDP over the long term. This drives higher aircraft utilization and sustained demand for aftermarket parts, an area where Loar is particularly well positioned. Loar’s business also shows high durability. Once its components are qualified on an aircraft platform, they typically remain sole or preferred sources for the multi-decade life of the aircraft, generating recurring, high-margin aftermarket revenue. Loar’s broad portfolio of more than 15,000 components, with no single product or platform representing a material share of revenue, further enhances resilience. Loar’s growth has been supported by a disciplined M&A strategy. Since 2012, Loar has completed 19 acquisitions, assembling a diversified portfolio of niche brands. Management has demonstrated a strong ability to integrate acquisitions and improve profitability, and we believe there is still ample runway for continued consolidation. Overall, Loar combines aftermarket exposure, proprietary products, diversified end markets and experienced management, positioning it as a growth compounder within the aerospace and defense ecosystem.”
Loar Holdings Inc. (NYSE:LOAR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 32 hedge fund portfolios held Loar Holdings Inc. (NYSE:LOAR) at the end of the fourth quarter, up from 29 in the previous quarter. While we acknowledge the risk and potential of Loar Holdings Inc. (NYSE:LOAR) 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 Loar Holdings Inc. (NYSE:LOAR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Loar Holdings Inc. (NYSE:LOAR) and shared a list of best American defense stocks to buy according to Wall Street analysts. 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.
