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Stewart Asset Management CIO Letter Q3 2025
Performance
In the quarter just ended, our Flagship’s investments advanced by 3.89%, net of fees and the S&P 500 Index appreciated by 8.12%. Year-to-date, our Flagship investments have gained 2.97%, net of fees and S&P 500 Index advanced by 15.23%.
Review
We are disappointed that we seriously underperformed the averages year-to-date. What my colleagues and I can report is that in the past decade, we’ve exceeded our long-term goal of doubling our clients’ money after fees every five years. In addition, in the three years ending September 30, 2025, our Flagship portfolio has gained 23.59%, net of fees exceeding the S&P 500 Index gains.
As stated before, about half of our underperformance this year is attributable to what is America’s largest health insurance group. We held the shares for several years but have now liquidated the holding. Over the years, the company’s earnings grew strongly, and their shares rose swiftly. More recently, the company was accused of overcharging for the medical services they provide to the Federal government.
Additionally, we held two smaller positions which declined due to decelerating earnings. We have also liquidated those investments.
Currently we believe your portfolios are in a good position to appreciate over the next half decade. We believe that your portfolio’s Look-through Earnings power is likely to grow about twice as fast as the earnings of the S&P 500 Index over the next five years. The portfolios are invested in what we believe to be fifteen superb businesses that are global leaders that have strong, sustainable earnings growth.
Prospects
In our first quarter letter sent to you in early April, we referenced “Liberation Day” and the decline in share prices that accompanied those ructions. We wrote that the aftermath of that decline created attractive investible values. From that low point your portfolios’ investments have advanced strongly as has the market overall.
What now? We expect the economy will continue to grow. We expect that earnings power of the businesses you own will expand notably over the next few quarters. Our work also leads us to believe the portfolio’s Look-through Earnings will advance sharply next year and continue to grow thereafter. All the companies whose shares we own have reported healthy profits, other than UnitedHealth, which was sold last quarter. Almost all the companies whose shares we own anticipate continued strong growth for the remainder of the year and for the coming year.
Conclusion
We are probably past the worst of the tariff wars, trade deals have been struck, the economy continues to expand, profit growth is substantial, and the banking system is sound. Many rightly point to a slowing job market, but our policymakers and central bankers seem to be aware of these near-term risks. Lastly, although we are not political pundits, we reckon the government shutdown will get fixed in a reasonable period of time. As you know, we take the long view and believe that we are well positioned to continue to achieve or exceed our long-term goal of doubling the value of your account, on average, after fees, every half decade.
My colleagues and I extend our very best wishes and thoughts to all of you for the remainder of the year.
Thomas M. Valenzuela
Chief investment Officer
* Performance Disclosures
The returns for the third quarter of 2025 is the performance of an account (“Flagship Portfolio”) that the Firm believes fairly represents the performance of the Stewart Asset Management Team’s (“SAM”) strategy (“Strategy”). The “net” returns presented are after the deduction of management fees as well as other expenses, including costsassociated with brokerage. The returns provided are based on performance of the Flagship Portfolio starting from July 1, 2025 to September 30, 2025. The year to date return stated for 2025 is based on performance of the Flagship Portfolio starting from January 1, 2025, to September 30, 2025.
Additional Disclosures
“Flagship” refers to an account that the Firm believes fairly represents the Stewart Asset Management Team’s strategy (“Strategy”), Past performance is not an indication of future results. The performance of each client’s managed account may differ due to specific investment guidelines, restrictions and time period which the account has been open and under the management of SAM. Accordingly, individual results will vary.
This Strategy are subject to market risk, which is the possibility that the market values of securities owned in an account will decline. Accordingly, you can lose money investing in this Strategy. Please be aware that this Strategy may be subject to certain additional risks. In general, equity securities’ values also fluctuate in response to activities specific to a company. Investments in foreign markets entail special risks such as currency, political, economic, and market risks. American Depositary Receipts (ADRs) represent an ownership interest in securities of foreign companies and involve many of the same risks as those associated with direct investment in foreign securities, including currency, political, economic and market risks. The Strategy may, from time to time, invest in stocks of small- and medium-capitalization companies which entail special risks, such as limited product lines, markets and financial resources, and greater market volatility than securities of larger, more established companies.
There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Please consider the investment objectives, risks and fees of the Strategy carefully before investing.
Any third-party data has been obtained from sources that we believe to be reliable, but we do not guarantee its accuracy, completeness or timeliness. Third party data providers make no warranties or representations relating to the accuracy, completeness or timeliness of the data they provide and are not liable for any damages relating to this data.
Stewart Asset Management is a team at Ingalls & Snyder, LLC. Ingalls & Snyder, LLC is a SEC registered investment adviser and FINRA member broker dealer. For important information about the investment manager, please refer to Form ADV Part 2 and Form CRS which are located here.
Ingalls & Snyder is a registered investment advisor and broker-dealer based in New York City. We provide investment management and related services to private clients and institutional investors.
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