Q4 2025 Investor Audibles: Laughing Water Capital, Plural Investing, Kathmandu Capital

Episode Summary

Executive Summary: The transcript is a multi-letter investing commentary focused on Q4 2025 results and portfolio updates from MacroOps, Laughing Water Capital, Plural Investing, and Kathmandu Capital. Across the letters, managers emphasize long-term fundamentals, event-driven catalysts, and patience over near-term market factor trends, while highlighting specific opportunities in CDMOs, biotech, spectrum policy, waste, homebuilding, software, luxury retail, tax-loss shells, and AI/semicap infrastructure.

Main Topics: MacroOps intro and newsletter/podcast framing (Priority: 3/5): Brandon promotes MacroOps/Collective and MITIMCo-related resources before introducing the Q4 2025 investor letter roundup, positioning the episode as an educational survey of manager letters and strategies. Laughing Water Capital: factor headwinds vs business fundamentals (Priority: 5/5): Matt Sweeney argues the market is dominated by size, momentum, and AI-related enthusiasm, but insists his strategy of buying good businesses through temporary uncertainty still works over time. He reviews positions in Lifecore, Liquidia, NextNav, Secure Waste, Vistry, PAR, and Thrive. NextNav thesis and FCC spectrum politics (Priority: 5/5): A major portion of Laughing Water’s letter is devoted to NextNav’s proposed GPS backup system and FCC approval process, arguing national-security needs and low-band spectrum economics make approval likely despite incumbent opposition. Plural Investing: value discipline and concentrated portfolio (Priority: 4/5): Chris Waller explains a classic deep-value framework: own cash-generative, undercovered businesses at large discounts to intrinsic value, maintain patience, and use primary research. He highlights Watches of Switzerland and ContextLogic as key wins and exits. Kathmandu Capital: U.S.-China industrial competition and AI infrastructure (Priority: 5/5): Vincent Lowe describes a portfolio built around geopolitical competition, defense, and AI-enabled supply chains, with significant gold/cash hedging. Key holdings include Vicor, ACM Research, Lumentum, Taiwanese suppliers, and Huntington Ingalls. Performance attribution and process evolution (Priority: 4/5): Across letters, managers discuss why some positions underperformed or were sold, stressing that process refinement, risk management, and adaptability matter more than short-term price action.

Key Arguments: Long-term investment outcomes should be judged over multi-year periods, not one year of volatile relative performance. Market leadership has been skewed toward large-cap growth, momentum, and AI-related businesses, making it harder for off-the-beaten-path value ideas to outperform in the short run. Lifecore’s growing customer wins, capacity utilization, and margin potential imply much higher earnings power than the market is pricing. Liquidia’s approved drug and favorable commercial traction provide upside even if patent litigation creates near-term noise. NextNav’s spectrum plan is framed as a national-security priority with bipartisan support and potential hidden asset value if the FCC advances the rulemaking. Secure Waste is mispriced because accounting obscures economic margins and because its cash flows are more stable than investors assume. Vistry should benefit from UK housing funding and stock repurchases as the stigma from accounting issues fades. PAR’s delay of revenue in favor of long-term customer wins is presented as strategically rational despite investor impatience. Plural believes its portfolio is worth materially more than current prices because of strong balance sheets, cash flow, and overlooked assets like Rolex distribution and NOLs. Kathmandu’s thesis is that U.S.-China strategic competition will drive demand for semicap, defense, power, and industrial infrastructure winners.

Data Points: Laughing Water Capital 2025 return: approximately 3.9% after fees and expenses - Full-year performance reported in the Q4 2025 letter Laughing Water Capital Q4 return: approximately 6.8% - Quarterly performance in 2025 Q4 S&P 500 Q4 return: 2.7% - Benchmark comparison in Laughing Water letter Russell 2000 Q4 return: 2.2% - Benchmark comparison in Laughing Water letter S&P 500 full-year return: 17.9% - Benchmark comparison in Laughing Water letter Russell 2000 full-year return: 12.8% - Benchmark comparison in Laughing Water letter Laughing Water since inception cumulative return: approximately 400% - Compared with S&P 500 and Russell 2000 since inception S&P 500 since inception cumulative return: 332% - Referenced in Laughing Water performance discussion Russell 2000 since inception cumulative return: 175% - Referenced in Laughing Water performance discussion Less than one-third of S&P 500 beat index: third year in a row in 2025 - Used to illustrate narrow market leadership S&P 500 vs equal-weight S&P 500: 34% outperformance over past three years - Highlights large-cap concentration Large-cap outperformance streak: five years in a row - Tied 1994-1998 as longest streak Profitable Russell 2000 members: up 8.3% - 2025 factor-performance observation Unprofitable Russell 2000 members: up 34.4% - Illustrates speculative risk appetite Lifecore current enterprise value: about $400 million - Laughing Water’s valuation framing Lifecore potential EBITDA: around $100 million - Manager’s long-term expectation Lifecore targeted EBITDA multiple: 16x - Suggested conservative valuation if execution continues Liquidia upside: could easily double or triple - If patent battle resolves favorably NextNav possible value per share: around $60 per share - Best-case spectrum valuation estimate based on spectrum comps NextNav spectrum range sought: 902-907 MHz and 918-928 MHz - Frequency bands in proposed FCC plan NextNav potential carve-out left unchanged: 11 MHz from 907-918 MHz - Spectrum area incumbents would retain Secure Waste economic EBITDA margin: north of 30% - Manager says accounting screens understate margins Secure Waste apparent screen margin: closer to 4% - Misleading quantitative screen result Vistry 2025 stock return: 12% - Reported in the letter Vistry expected EBIT growth: high teens in 2H 2025 and >20% in 2026 - Management guidance cited in letter Vistry valuation: roughly 4.5x 2026 EBIT - Compared with transaction comps implying low double-digit multiple PAR Technology stock performance: down 50% on the year - Major detractor in Laughing Water portfolio Thrive Group status: exited position - Manager says thesis broke down and opportunity cost rose Plural Investing Q4 return: 5.7% net - Quarterly fund result Plural portfolio look-through FCF multiple: 7.7x in three years - Valuation estimate on portfolio basis Plural portfolio average post-tax ROIC: 22% - Quality metric of holdings Plural portfolio intrinsic value discount: 44% of intrinsic value in three years - Estimated pricing of holdings Watches of Switzerland share price: 4.9 - Approximate trading price cited by Plural Watches of Switzerland valuation: 11x free cash flow - Stock valuation in Plural letter Watches of Switzerland UK Rolex share: around 50% - Market share cited Watches of Switzerland US Rolex share: around 10% - Market share cited Watches of Switzerland CEO ownership: around £40 million - Aligned management ownership ContextLogic cash: $300 million - Balance sheet value cited by Plural ContextLogic net operating losses: $2.9 billion - Tax asset thesis ContextLogic tax shield potential: $609 million - Theoretical tax value at 21% corporate tax rate ContextLogic acquisition value: $908 million - U.S. Salt acquisition announced in December 2025 Kathmandu Q4 gross return: 13.65% - 2025 Q4 performance Kathmandu Q4 net return: 10.85% - 2025 Q4 performance net of fees Kathmandu full-year gross return: 52.04% - 2025 annual performance Kathmandu full-year net return: 45.60% - 2025 annual performance net of fees Kathmandu portfolio cash + gold: approximately 35% - Year-end defensive allocation U.S. tariff on Swiss watches: reduced from 39% to 15% - Watches of Switzerland catalyst in Kathmandu letter Vicor licensing run rate: $90 million annual run rate as of Q3 2025 - Current progress in monetizing IP Vicor management target: $200 million annual licensing run rate by 2027-2028 - Company guidance cited in Kathmandu letter Vicor long-term targets: $1 billion revenue and 65% corporate margins - Management/analyst framing in Kathmandu letter

Pivotal Quotes: "One trip around the sun tells us very little." — Matt Sweeney: Laughing Water Capital on why annual performance should not dominate the assessment of the strategy "At some point, fundamentals will matter." — Matt Sweeney: Argument that the market will eventually reward earnings power and execution over factor-driven pricing "We are value investors. We invest in businesses that we believe are worth substantially more than the price they are trading at." — Chris Waller: Plural Investing describing its core philosophy and risk framework

Implications: The letters suggest a market still dominated by momentum, AI, and geopolitics, but managers believe patient stock selection in misunderstood businesses can still generate outsized long-term returns. Expect continued volatility, selective de-risking, and heavy emphasis on catalysts, capital allocation, and policy outcomes.