3Q 2026 Investor Letter | Mott Capital Thematic Growth

The S&P 500 stalled in the third quarter, but a lot was happening beneath the surface as sectors rotated. Technology took a sharp turn lower in July and spent much of the quarter trying to recover. As a result, the S&P 500 Total Return Index finished September up 12.75% for the year, compared with 10.21% at the end of June. Meanwhile, the Mott Capital Thematic Growth strategy finished the quarter up 9.01% for the year, compared with -4.70% at the end of June.

During the quarter, Grail, Illumina, and Microsoft posted strong gains. Grail shares surged after an FDA advisory panel voted favorably. The vote paves the way for FDA approval of Grail’s multi-cancer detection test. Approval could also open the door to Medicare coverage and potential coverage from private insurers. I believe these types of blood tests are still in the early stages of development. With the adoption of AI, these tests are likely to improve over time, making them a desirable tool for detecting cancer. Illumina’s stock also rose sharply during the quarter as investors looked toward a re-acceleration in its growth. However, given the stock run-up since our initial purchase, I felt it was time to reduce the position and take some profits. Meanwhile, Microsoft delivered very strong fiscal fourth-quarter results in July, sending the stock higher.

Boeing has been a dead weight on the portfolio for some time. While we have a profit in the stock, the performance has been lackluster, with the shares essentially trending sideways since 2022. Still, Boeing operates in a duopoly with Airbus, and it appears to be slowly getting back on track as it increases deliveries of its 737 MAX models. At some point, I think its massive order backlog should drive a higher stock price and make the wait pay off.

UnitedHealth struggled during the third quarter, but much of that decline has since reversed. The stock surged back toward its recent highs early in the fourth quarter after the company reported better-than-expected quarterly results in October.

During the quarter, I used the proceeds from Illumina to buy Cboe, an options exchange operator. Options trading has become a major part of financial markets in recent years, and based on my own market analysis, I believe options will become an even bigger part of the market’s future. It seems likely that this growing trend will lead to increased transaction fee revenue for Cboe and other exchanges. Shares fell sharply in the third quarter as investors worried that betting markets like Kalshi might roll out new types of derivatives. However, Cboe has listed products that will be hard to replace, and taking advantage of that sell-off seemed like the right move.

Overall, I was very pleased with the quarter. It was one of the better quarters I can remember in recent years, and it felt good to see some of the investments we took stakes in over the past two to three years start to pay off, like Illumina and Grail. I’m also excited about the prospects for ServiceNow and Intuit, two additions we made earlier this year.

Of course, we still own many of our old reliable stocks, like Apple, Alphabet, Microsoft, Amazon, Intuitive Surgical, Visa, and Mastercard, which continue to compound earnings over time.

Playing the long game isn’t easy in markets designed for the short term, but investing in businesses with unique opportunities can pay off. I’m hopeful the third quarter’s success is the start of another period of strong performance for us.

Until next time,

-Mike

Michael Kramer publishes independent macro and options research read across 10+ platforms and by institutional desks.

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Michael Kramer
Founder
Mott Capital Management, LLC

Annualized Performance

N.A. – Information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire year.
† Performance reflects the non-annualized performance from 8/1/2014 to 12/31/2014.
** For periods with less than 36 months of composite performance, no 3-year ex-post standard deviation measurement is available.

Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.

An investment may be risky and may not be suitable for an investor’s goals, objectives and risk tolerance. Investors should be aware that an investment’s value may be volatile and any investment involves the risk that you may lose money. Investment performance of a model depends on the performance of the underlying investment options and on the proportion of the assets invested in each underlying investment option over time. The performance of the underlying investment options depends, in turn, on their investments. The performance of these investments will vary day to day in response to many factors. Asset allocation strategies are subject to the volatility of the financial markets, including that of the underlying investment options’ asset class. Diversification does not ensure a profit or guarantee against a loss. Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.)

Mott Capital Management, LLC, is an independent registered investment adviser. Mott Capital Management, LLC (“Mott”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Mott has not been independently verified. GIPS is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

The Thematic Growth Composite is a blend strategy of different market capitalizations, which is approximately divided equally among three sectors. The Core Growth sector includes large multi-national companies, the Growth Sector includes mid- to large-cap companies, and the Aggressive Growth sector includes small- to mid-cap companies. The strategy is concentrated, and typically includes approximately 10-20 positions, and 5% cash. The portfolio may hold fewer positions in times of market uncertainty, when raising cash as a hedge. The strategy only invests in stocks, ADRs, and ETFs denominated in USD. The Thematic Growth Composite was created June 2015. The inception date of the strategy is August 1, 2014. Prior to 12/31/2025, the composite was called the All-Cap Growth Composite.

The S&P 500 is a free-float capitalization-weighted index of 500 large-cap common stocks actively traded in the United States. The index is shown as a general market indicator and may not reflect the same exposures as the composite.

The investment management fee schedule for the composite is 2% on the first $250,000, 1.5% on the next $750,000, and 1.0% on the remainder. Actual investment advisory fees incurred by clients may vary. Further information regarding investment advisory fees is described in Part II of the firm’s Form ADV.

Past performance is not indicative of future results. The U.S. Dollar is the currency used to express performance. Performance shown represents total returns that include income, realized and unrealized gains and losses. Net of fee performance was calculated using actual fees. Composite performance is presented net of foreign withholding taxes on dividends, interest income, and capital gains. Withholding taxes may vary according to the investor’s domicile. Policies for valuing portfolios, calculating performance, and preparing GIPS reports are available upon request. The annual composite dispersion presented is an asset-weighted standard deviation calculated using net returns of accounts in the composite the entire year. The 3-Year Standard Deviation represents the annualized standard deviation of actual net composite and benchmark returns, using the rolling 36-months ended each year-end.