US Equity Growth: investor letter Q2 2025

Your capital is at risk.

"It is not the beauty of a building you should look at; it's the construction of the foundation that will stand the test of time." - David Allan Coe, singer-songwriter.

Our minimum investment horizon is five years, during which a lot can happen. Since 2020, we have endured a global pandemic, supply shocks, and, more recently, sweeping changes to global tariffs and the strikes on Iranian nuclear sites.

These multiple once-in-a-generation events can tempt investors to cling to yesterday’s certainties, the recognisable structures. However, if the past few years have taught us anything, what matters is not the structure you can see but the foundation beneath. When the ground keeps shifting, this matters even more.

This quarterly letter discusses why resilient company cultures remain essential amid uncertainty and illustrates how our commitment to cultural analysis has shaped recent portfolio decisions.

Focus on our edge – analysing culture

Predicting short-term market moves is not our area of expertise. Instead, we must focus on the things that matter, the things we believe we have an edge in analysing, and the forces whose trajectories remain largely price indifferent.

Company culture, and our analysis of it, is the most critical factor in navigating change and delivering good long-term returns. We place culture at the heart of our philosophy and process. Because of our corporate structure and culture, we have an advantage over others in analysing and harnessing it for our clients.

Yes, we must focus on structural tailwinds, such as plunging battery costs powering EVs, cheaper AI inference and breakthrough biological insights in healthcare, which are driving lasting growth.
Companies need financial resilience to navigate the news flow. Yet a company's culture is the ultimate foundation for such adaptability and long-term growth.

Ask any structural engineer: steel reinforcement makes concrete resilient and permits daring shapes. Culture plays the same role inside companies, supporting them in building their opportunities.

CEOs as architects and builders

One way to categorise culture is in two complementary forms:

• Foundational culture: The deeply embedded vision set out by a company’s CEO or founder, guiding strategy and defining its long-term purpose.
• Created culture: How the foundational principles manifest daily, guiding team behaviour, employee incentives and operational responsiveness.

Dee Hock, founder of Visa, elegantly captures this concept: "Understanding events and influencing the future requires mastering four ways of looking at things: as they were, as they are, as they might become, and as they ought to be." Foundational culture embodies how things ought to be, while created culture bridges today's reality to that aspirational state.

While foundational culture is slow to change, created culture adapts and evolves to help a business unlock its long-term opportunity. A management team cannot directly control how its foundational culture manifests. However, it can put in place the proper scaffolding to ensure the core tenets of what they believe to be important permeate throughout the organisation.

Consequently, the best long-term CEOs and founders are both architects and builders. They have a clear vision of what they are creating and a strong cultural foundation that provides the scaffolding for everything they build above. They are willing to build breadth and height and are not afraid to build out the occasional unusual extension, even when it is deeply unpopular or untested. And they will, when necessary, dismantle parts of what they have built, either to unlock something new or to improve the health of the overall design.

Portfolio stories: Shopify and CoStar

To illustrate our approach, consider two holdings whose strong cultures have enabled resilience and continued growth:

Shopify: pivoting boldly from logistics to AI-driven growth

Since founding Shopify in 2006, Tobi Lütke has acted as its cultural architect, embedding merchant success as the company's guiding principle. This merchant-first culture drove Shopify’s steady rollout of game-changing tools like Shopify Payments, Shopify Capital, and the Shopify Fulfilment Network. Lütke invested heavily in logistics as a natural extension of that guiding principle. Yet, he did a complete 180-degree reversal in 2023, exiting logistics to focus on transformative AI innovations like the “Sidekick” assistant and the vision of “declarative software”. We had been analysing Shopify’s culture since 2016, and so while others in the market were questioning the move, we had a hypothesis that this decision was reflective of Shopify’s foundational culture in action, underpinning its adaptability. Lütke’s decision has led to strong operational performance in the subsequent years.

CoStar: building growth resilience through strategic integration

Not every great builder needs to build from within. Some great architects bolt on bold and new extensions from the outside. Andy Florance founded CoStar in 1987, guided by a fundamental insight: fragmented real-estate data constrained its value. Initially established as a data facilitator, CoStar evolved these isolated data assets into a powerful, interconnected real estate marketplace. A prime illustration of this adaptive strategy was CoStar's transformative 2014 acquisition of Apartments.com, rapidly scaling an $105m revenue business into a billion-dollar-plus segment that surpassed the original core data operations.

We've closely analysed CoStar’s corporate culture for nearly a decade, consistently observing Andy Florance’s methodical approach to strategic integration. The company’s current bold expansion into the residential market with Homes.com echoes the successful playbook previously executed with Apartments.com. Our hypothesis is that the resilient, adaptable culture Florance has cultivated, marked by disciplined integration, data-driven decision-making, and leveraging network effects, will once again underpin CoStar’s successful entry into this new vertical, positioning it to thrive even as competitors struggle. The broader market has questions over CoStar’s move into residential, but we’ve seen this pattern before, and back Florance to deliver again.

Evolving US consumption patterns

Effective company culture manifests in its share price over the very long term, a decade or more. However, a company’s position in the portfolio must be informed by the system within which it operates today.

Following “Liberation Day” trade announcements in April, we discussed multiple scenarios and probabilities and ultimately decided to sit on our hands in the immediate aftermath. The range of outcomes and chances of making a mistake with knee-jerk decisions had increased markedly. This decision paid off during a market rebound. As the dust settled, we revisited the shape of the portfolio, and despite recent optimism from tariff negotiations, we are cautious on the consumer outlook due to structural pressures from persistent tariffs, AI-driven labour displacement, and political uncertainties.

All this may potentially impact higher-end discretionary spending in the coming months, and the US Growth portfolio has significant exposure to consumer discretionary spending built through our bottom-up stock selection process.

Given high competition for capital and increasing conviction in some of our enduring growth names, we decided to add to two of them. Operational progress at Ensign Group, the skilled nursing home provider, remains strong, with a reassuring regulatory outlook and durable demand characteristics. Ensign’s culture of radical local empowerment of facility leaders and its strong, values-based culture empowers an entrepreneurial engine to acquire and turnaround struggling facilities.

At medical device company Penumbra, continued excellent execution and upcoming launches in computer-assisted vascular thrombectomy justified adding to our position. Penumbra’s effective cultural combination of innovation and risk-taking, with a long-term approach to things such as remuneration and strategic relationships, increases its chance of success.

We decided to fund these additions out of two of our highest conviction ideas, Shopify and Doordash. These holdings will remain among some of the portfolio's largest individual holdings. Both companies are sensitive to consumer demand. At Shopify, there could be an impact on merchant services revenue. There is a hypothesis that Doordash’s business may be more resilient (customers trading down from eating out), but our recent reassessment of the upside from here following a strong share price run suggested that Doordash was more sensitive to valuation risk now, and we should have a lower weighting.

Related to this, we invested in two new holdings that reflect the ongoing evolution of consumption. We initiated a small position in Circle Internet Group (either at IPO or shortly thereafter, depending on specific client restrictions). It's a leading player in the stablecoin space (digital currencies), notably as the issuer of USDC, the second-largest stablecoin by market capitalisation. Circle is interesting due to its role in building a new financial system based on digital currencies and its potential for future growth as the digital asset industry matures. It may surprise some to know that in 2024, the $35tn of stablecoin transfers exceeded Visa’s throughput by more than two times, and monthly volumes have continued to push higher into 2025. While not exactly comparing apples to apples, it shows us that public blockchains are no longer just a niche experiment; they are a parallel financial system operating at a globally significant scale.

We also invested in AppLovin, which provides app developers with tools to grow, monetise, and analyse their apps through its marketing, monetisation, and analytics platforms. AppLovin’s progress suggests that consumption is becoming more embedded in entertainment, more data-driven, and faster-cycling, a structural tailwind for platforms that can harvest real-time engagement signals and a challenge for traditional, identity-based advertising models.

Given our thoughts about the US consumer expressed above, we funded these positions from within the portfolio’s existing advertising exposure. After an extensive review, we sold Roku, the maker of digital media players, smart TVs, and streaming services. Its forward-looking hypothesis has taken longer to materialise than we had hoped, partly related to over-investment during the Covid period. The costs of maintaining its dominance in the connected TV market have continued to constrain margins, and AppLovin was a more attractive opportunity in this space.

Conclusion

Uncertain times are uncomfortable and foster fear, but it is in these moments that builders thrive. Strong foundational cultures provide the scaffolding; adaptable, created cultures scramble the workers to pour fresh concrete when cracks appear, and build new things while most others are distracted by news flow.

In the end, the opportunity to invest in future outlier companies that emerge in the US market is not gifted by any administration; it is built, brick by stubborn brick, by founders and teams who see the US and the world not as they are but as they ought to be. Our job is to support the crane arm so that it can keep moving regardless. The companies with the strongest cultural foundations will stand the test of time and excel, which is why our analysis of company culture gives us an edge.

US Growth

Annual past performance to 30 June each year (%)

Annualised returns to 30 June 2025 (%)

Source: Revolution, S&P. US dollars. Returns have been calculated by reducing the gross return by the highest annual management fee for the composite. 1 year figures are not annualised. 

Past performance is not a guide to future returns.

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