Happy New Year! Our investment letters in 2025 hinted at a broadening out of the overall market, or a “rotation” of market leadership. The only difference with our first letter of 2026 would be that many of the prognosticators and “wags” of Wall Street found on CNBC have come around to Winslow’s way of thinking. Since October, here are examples of Winslow stocks outperforming the market: Kaiser Aluminum, Teradyne, SLB, Eli Lilly, Ulta Beauty and Merck. Outside of Eli Lilly, none of these stocks would be considered “market darlings,” accentuating our thesis.
Why is this working? The 10 largest stocks now comprise over 40% of the S&P 500 Index. The index itself is no longer a suitable vehicle for diversification. Price discovery, due diligence of management teams, and profitability have been replaced by momentum, leverage and speculation.
