Penn Davis McFarland’s Outstanding Performer in Q1

Penn Davis McFarland, an investment management company, released its first quarter 2025 investor letter. A copy of the letter can be downloaded here. Decades of unchecked government spending have strained the U.S. balance sheet, limiting economic growth and security, prompting President Trump to prioritize deficit reduction. The government’s noble commitment to cut spending faces challenges as it must abruptly detox a market reliant on federal support, with initiatives like DOGE and tariffs forming a two-part strategy against the deficit. The firm believes that the portfolio is well-positioned for a higher-volatility environment. The high-quality companies in the portfolio, with fortress balance sheets, are well-positioned to weather economic challenges. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its first quarter 2025 investor letter, Penn Davis McFarland highlighted stocks such as Sprouts Farmers Market, Inc. (NASDAQ:SFM). Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a retailer of fresh, natural, and organic food products under the Sprouts brand. The one-month return of Sprouts Farmers Market, Inc. (NASDAQ:SFM) was -4.07%, and its shares gained 96.69% of their value over the last 52 weeks. On July 3, 2025, Sprouts Farmers Market, Inc. (NASDAQ:SFM) stock closed at $162.29 per share, with a market capitalization of $15.881 billion.

Penn Davis McFarland stated the following regarding Sprouts Farmers Market, Inc. (NASDAQ:SFM) in its first quarter 2025 investor letter:

“Sprouts Farmers Market, Inc. (NASDAQ:SFM), the specialty grocery store chain focused on fresh produce and low cost better-for-you products, has been as outstanding performer. Our first purchase of SFM was made in the summer of 2019 at $17 and change. Several worries were weighing on the shares at the time, including the recent departure of the CEO, sluggish produce pricing and the competitive threat from Amazon’s acquisition of Whole Foods, causing the multiple to contract to a reasonable 15x forward earnings.