Finance

The SGA U.S. Large Cap Growth fund recorded a gross return of -11.1% during the first quarter of 2026, falling short of the Russell 1000 Growth Index's -9.8% and the S&P 500 Index's -4.3% return. This relative underperformance was particularly notable as market dynamics began to differentiate between companies directly benefiting from artificial intelligence advancements and those perceived as facing challenges due to these technological shifts.

During this period, strategic portfolio adjustments were made to optimize holdings. A new position was initiated in Mastercard, capitalizing on a favorable price point, while existing stakes in Gartner and UnitedHealth were divested. These exits were prompted by a reassessment of fundamental business outlooks and a recalibration of strategic alignment within the portfolio. Concurrently, Arm Holdings emerged as a significant contributor, driven by robust fiscal third-quarter results that surpassed expectations, largely propelled by accelerated adoption within the data center sector. Conversely, software companies faced headwinds, with declines of approximately 25% year-to-date, as new product releases from Anthropic in early 2026 ignited concerns about the sustainability of established business models.

Despite the challenging market conditions and sector-specific pressures, the portfolio remains focused on its long-term objectives. It continues to demonstrate consistent revenue and earnings growth in line with projections, with an anticipated 13% revenue growth and 19% earnings growth over the forthcoming three years. The management team is actively mitigating AI disruption risks by strategically reducing software exposure, reinforcing investment in durable growth models, and meticulously managing position sizes, while maintaining conviction in the ability of established industry leaders to leverage and benefit from AI innovations.

In a rapidly evolving technological landscape, strategic foresight and disciplined portfolio management are paramount. While short-term fluctuations are inherent in dynamic markets, the commitment to identifying and nurturing companies with strong long-term growth potential remains unwavering. The proactive adjustments and continuous evaluation of market trends ensure that the portfolio is well-positioned to navigate future challenges and capitalize on emerging opportunities, ultimately aiming for sustained value creation and superior returns for investors.

Aquestive Therapeutics has encountered a significant hurdle with its Anaphylm drug candidate, leading to a revised outlook. The U.S. Food and Drug Administration (FDA) issued a Complete Response Letter (CRL) for Anaphylm, primarily due to inadequacies identified in human factors studies, a critical component for drug approval.

In response to the FDA's decision, Aquestive Therapeutics has outlined a plan to address the highlighted deficiencies. The company intends to resubmit the New Drug Application (NDA) for Anaphylm in the third quarter of 2026. This revised timeline suggests that potential approvals in the United States, European Union, United Kingdom, and Canada could be realized by the end of 2027, provided that the resubmitted data successfully meet regulatory standards. Despite the setback, Aquestive maintains a robust financial position, bolstered by its existing cash reserves and a newly secured $150 million debt facility from Oaktree. This financial strength is expected to provide sufficient capital to support the company through to a potential Anaphylm launch.

However, the path forward for Anaphylm is not without its challenges. The competitive landscape for epinephrine auto-injectors is evolving rapidly, with the emergence of needle-free alternatives and the expiration of key patents for established products like EpiPen. These factors, combined with uncertainties regarding real-world adoption rates and market penetration, cast a shadow over Anaphylm's previously projected peak sales of $300–400 million. Consequently, a more conservative assessment of the drug's commercial potential is warranted.

In the dynamic and often unpredictable biopharmaceutical sector, resilience and adaptability are paramount. Companies must navigate stringent regulatory environments and intense market competition while maintaining a clear vision for innovation and patient benefit. Aquestive's commitment to addressing regulatory feedback and its strategic financial planning demonstrate a proactive approach to overcoming adversity. Ultimately, the success of Anaphylm will depend on its ability to demonstrate compelling efficacy and safety, alongside a strong value proposition that resonates with healthcare providers and patients alike, ensuring that this essential treatment option reaches those who need it most.