Wedgewood Partners' Q4 2025: Performance vs. Insider Actions

The numbers tell a story of uneven ground. Wedgewood Partners' composite net return for the fourth quarter of 2025 was a negative -1.8%. That dragged the year-to-date return down to 4.3%. It's a mixed bag, with some powerful contributors offset by notable detractors. The firm's top performers in the quarter were Alphabet, Taiwan Semiconductor Manufacturing, and Apple, which together provided a significant portion of the positive contribution.

Alphabet was the standout, contributing 2.38% to the quarter's return. Taiwan Semiconductor Manufacturing added 0.87%, and Apple chipped in 0.71%. These three names were also the firm's largest holdings as of September 30, 2025, with Taiwan Semiconductor alone accounting for 9.65% of the portfolio. The firm's own letter notes that TSMC's contribution was driven by its flawless execution on leading-edge nodes, a key enabler for the AI era.

This sets the stage for a critical question. The firm's portfolio is heavily weighted toward these high-flying tech names, and they were the primary drivers of the quarter's performance. Yet, as we'll see, the actions of those closest to the company-its insiders-tell a different story. The disconnect is clear: a top contributor to the fund's returns is also a stock where recent insider selling has been notable. That's the signal the smart money is sending.

The Smart Money Signal: What the Filings Reveal

The numbers show TSMC was a top contributor. The filings tell a different story. Despite being the firm's second-largest holding and a key driver of its quarterly return, Wedgewood Partners recently sold 8,218 shares of Taiwan Semiconductor Manufacturing. That's a direct contradiction of its own stated philosophy. The firm's investment approach is built on a concentrated, "buy and hold" model. Its philosophy emphasizes minimum turnover and treating stocks like long-term business ownership. Selling a major position, especially one that just helped deliver a positive quarter, is a sharp departure from that principle. It suggests the firm's view has shifted.

The firm's own language offers a clue. In its January 2025 outlook, it stated it was "patiently waiting for better prices" for both new and existing positions. This selling activity aligns with that patient stance, but it's a patient stance that sees near-term overvaluation in its top holdings. The smart money isn't just waiting; it's taking profits.

This is a classic signal. The fund's portfolio is heavily weighted toward the same high-flying tech names that are driving its returns. Yet, insiders are trimming those very positions. It's a disconnect between performance and positioning. When a fund's largest contributors are also its recent selling targets, it raises a red flag. The skin in the game is telling you to be cautious, even as the headline numbers climb.

Alignment Check: CEO Skin in the Game

The firm's recent sale of TSMC shares raises a key question: is the leadership team fully aligned with these moves? The answer reveals a divergence between the firm's actions and the personal holdings of its CEO, David Rolfe.

Rolfe's personal portfolio, as of July 2025, is a mirror of the firm's top holdings. He owns shares in 19 public stocks with a net worth of over US$ 529.5 million. Crucially, his personal portfolio includes the same mega-cap tech names that dominate the fund, including Meta, Alphabet, and Apple. This alignment is a positive sign; when a CEO's personal wealth is deeply tied to the same companies the firm manages, it suggests a shared skin in the game.

Yet, a gap appears when we look at Taiwan Semiconductor Manufacturing. The firm recently sold 8,218 shares of TSMC. Rolfe's personal holdings, however, do not show a recent reduction in this position. This creates a clear split. The firm is trimming a major holding that contributed positively to its quarterly return, while the CEO is not following suit with his own money.

This divergence is telling. It suggests that while the firm's management is acting on a view of near-term valuation, Rolfe's personal investment thesis may differ. Perhaps he sees longer-term potential in TSMC that the fund's recent actions do not reflect. Or, more cynically, it could indicate that the firm's sale was driven by portfolio-level rebalancing or cash needs, not a shared conviction about the stock's future. The smart money's signal is mixed: the firm is selling, but the CEO's wallet says otherwise.

Catalysts and Risks: What to Watch

The smart money signal is now set. The firm sold a major contributor, while the CEO's wallet says otherwise. The next catalyst is clear: the Q1 2026 13F filing. This is the official record of the firm's portfolio as of March 31, 2026. If Wedgewood Partners continues to trim its position in Taiwan Semiconductor Manufacturing, it would confirm a loss of conviction. That would validate the recent selling as more than a tactical move; it would signal a fundamental shift in the firm's view on the stock's valuation.

The major risk, however, is that this selling is purely tactical. The firm's own outlook, from January 2025, remains patient: it is "patiently waiting for better prices" for both new and existing positions. This suggests the sale could be a rebalancing act, not a rejection of the underlying AI-driven growth thesis for TSMC. The stock's fundamentals remain strong, with the company forecasting 22% year-over-year revenue growth for Q4 2025 and its 3-nanometer technology a key revenue driver. If the firm's philosophy is truly long-term, a tactical sale at a high price might be a smart move, not a warning.

Monitoring the firm's performance against benchmarks will be critical. The Wedgewood Composite net return for the year-to-date is 4.3%, which trails the S&P 500's 17.9% over the same period. Sustained underperformance could pressure the firm's concentrated, low-turnover philosophy. The market is rewarding growth, and if the firm's portfolio continues to lag, it may force a re-evaluation of its strategy.

The bottom line is one of divergence. The firm is selling, but the CEO's skin in the game suggests a different timeline. The upcoming 13F filing will show which view the smart money is following. Watch for continued selling to confirm a warning, or for the position to stabilize to suggest a tactical opportunity. In the meantime, the firm's own numbers tell you the philosophy is being tested.