David Rolfe's 4th-Quarter Wedgewood Funds Letter- 'Punch Bowl: Redux'

“In no sense is this QE. This is nothing like it” -Jerome Powell, October 8, 2018

Review and Outlook

For calendar 2019 our Composite (net)i gained +31.96%. The S&P 500 Index gained +31.49%. The Russell 1000 Growth Index gained +36.39%.

Top performance detractors for the year include Qualcomm, Alcon, Cognizant Technology Solutions, C.H. Robinson, and FleetCor. Top performance contributors for the year include Apple, Edwards Lifesciences, Facebook, Visa, and Fastenal.

Our Composite (net) gained +9.57% during the fourth quarter of 2019. The S&P 500 Index gained +9.07% during the quarter. The Russell 1000 Growth Index gained +10.62%.

Top performance detractors for the fourth quarter include C.H. Robinson, Motorola Solutions, Alcon, Ulta Beauty, and Starbucks. Top fourth quarter performance contributors include, Apple, Facebook, NVIDIA, Visa, and Fastenal.

We were unusually busy during the fourth quarter. We sold Ulta Beauty and C.H. Robinson. We bought FleetCor, S&P Global, and Copart. We trimmed Fastenal, Ross Stores, Apple, Celgene, Edwards Lifesciences, and Visa. We added to NVIDIA, Tractor Supply, Electronic Arts, CDW Corp., Motorola Solutions, Bookings Holdings, and Bristol Myers.

Motorola Solutions (MSI) reported +7% revenue growth, driven by software and services growth of +12% along with continued margin expansion. Recall that Motorola Solutions’ primary business is providing specialized communication infrastructure, equipment and software to public safety, law enforcement, and increasingly to large corporations. Motorola’s backlog of sales to these customers, which we typically use as a reasonable proxy for future revenue growth, was up +17% overall and up +26% in the higher margin software and services segment. As such, we continue to believe Motorola Solutions has room to accelerate top and bottom-line growth, while the stock continues to exhibit an undemanding, market multiple– rare, in our view, whereby almost any company these days exhibiting double-digit growth commands rich multiples.

We eliminated C.H.

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