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11/4/25
Stocks had a strong third quarter, following a solid second quarter. In fact, the market hit new all-time highs for both the S&P 500 and the NASDAQ 100, driven mainly by mega-cap technology stocks, especially NVIDIA. However, as we move into the fourth quarter, there are signs that investors may be becoming cautious of the heavy spending by some of these mega-cap companies, as seen in their increasing CapEx numbers. This could potentially cause a negative shift in market sentiment toward these stocks.
As of the end of the third quarter, the Mott Capital Management Thematic Growth Strategy had gained 5.68% year to date, net of fees and inclusive of dividends. Over the same period, the S&P 500 Total Return Index, inclusive of dividends, rose 14.83%.
| Thru 9/30/25 | 5-Yr Annualized | Since Inception Annualized | |
| MCM Thematic Growth | +5.68% | +11.33% | +10.17% |
| S&P 500 Total Return | +14.83% | +16.47% | +14.92% |
Mega-cap companies that we own, such as Microsoft, Alphabet and Amazon, have all increased their CapEx spending dramatically over the past couple of years to invest in artificial intelligence. While I’m a believer in the technology and have incorporated it into my daily workflow, I’m concerned that the level of spending and capital commitments could eventually weigh on these businesses’ overall cash flow. I fear the spending could become an ongoing, perhaps never-ending process, given the immense and continually growing demands for computing power and energy to deploy AI tools.
This has been a serious concern of mine since the beginning of 2025. As a result, I’ve continued to trim positions in the portfolio that have become overweight and maintain large CapEx budgets. During the quarter, I reduced the position in Alphabet to a 5% weighting.
This approach has also given me the flexibility to invest in new businesses and rotate into some out-of-favor parts of the market that may one day benefit from AI, but in different ways. As you know, in the second quarter, I added UnitedHealth and Zoetis to the portfolio. This quarter, I increased our Grail position to 5% of our portfolio.
Grail was spun off from Illumina last year, and as part of that spinoff we received fractional shares. I held onto those shares because I wanted to see the data release and evaluate the company’s progress in blood-based cancer detection tests. During this quarter we learned that the test results were positive and could potentially lead to FDA approval. As a result, I increased our position and look forward to watching this company grow in the coming years.
(It’s worth noting that when Illumina acquired Grail in 2021, it paid approximately $8 billion for it. The EU later compelled Illumina to spin off Grail over antitrust concerns. Currently, Grail’s market value is around $3 billion meaning it would need to more than double to match the valuation Illumina paid in 2021. While this change in assigned value is significant, it should not be taken as an indication of inherent weakness in the position, but rather as a reasonable market recognition that Grail will now have to pursue its product development on its own without the benefit of support from its former parent.)
Overall, I’m pleased with how the portfolio has evolved this year, though I don’t believe the work is finished, given that approximately 25% of the portfolio remains in cash. For that reason, I don’t plan to sell any additional positions for the rest of the year unless something unforeseen occurs. However, I would be more than happy to add new positions I’m monitoring should the right opportunities arise.
Until next time,
-Mike
Michael Kramer
Founder
Mott Capital Management, LLC
| 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.
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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 recommendation 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 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.
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.
Mott Capital provides data to Interactive Advisors for use in its recommended portfolios. Interactive Advisors, an SEC registered investment adviser. Mott Capital is not affiliated with Interactive Advisors. Interactive Advisors uses data provided by MOTT Capital to create a portfolio for its clients. Additionally:
- Only investors matching a specific risk profile determined pursuant to Interactive Advisors’s risk questionnaire may invest in Mott Capital’s model portfolio on the Interactive Advisors platform;
- Interactive Advisors clients that qualify for and subscribe to Mott Capital’s model portfolio on Interactive Advisors platform are clients of Interactive Advisors. They are not Mott Capital clients.
- Mott Capital has a financial incentive (and therefore, a conflict of interest) in a current or prospective client investing with Interactive Advisors and investing in its portfolio on the Interactive Advisors platform because Mott will receive a portion of the annual management fee (and, if applicable, performance fee) Interactive Advisors charges clients who invest in Mott’s portfolio, so Mott will receive more money the more investors sign up with Interactive Advisors and select the Model based upon data provided by Mott Capital.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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