As we mentioned in our Q3 2025 Quarterly commentary, investors piled into speculative low-quality, high volatility, and already expensive blue-chip tech stocks. To drive the point home we note that the average return of stocks of companies that lose money was +29% in the quarter vs. profitable companies rising only 7.9% on average. At the sector level, only Tech and Communication Services beat the benchmark by any material amount with nearly every other sector lagging in Q3 2025.
By every metric we are aware of, the mania around AI looks as precarious and foolish as any bubble seen in our careers. The market is now awash in the stories that clearly lay-out the circular nature of the vendor financing that has become ubiquitous to the AI narrative. The sheer size of the announced deals makes the shenanigans of Nortel Networks, WorldCom and others from the dot.com bubble look miniscule by comparison. What’s different this time you ask?
Private equity and private credit would be our answer. In a brief and brilliant article by Bloomberg’s Sridhar Natarajan and Allison McNeely, they explain that there are now 19,000 private equity funds. That’s 5,000 more PE funds than there are McDonalds.
L2 Large Cap Core – November Q4 2025
Table of contents
When
November 1, 2025
Who
Matthew Malgari
Dr. Sanjeev Bhojraj
Nathan Przybylo
Q3 2025 STRATEGY PERFORMANCE:
As we mentioned in our Q3 2025 Quarterly commentary, investors piled into speculative low-quality, high volatility, and already expensive blue-chip tech stocks. To drive the point home we note that the average return of stocks of companies that lose money was +29% in the quarter vs. profitable companies rising only 7.9% on average. At the sector level, only Tech and Communication Services beat the benchmark by any material amount with nearly every other sector lagging in Q3 2025.
By every metric we are aware of, the mania around AI looks as precarious and foolish as any bubble seen in our careers. The market is now awash in the stories that clearly lay-out the circular nature of the vendor financing that has become ubiquitous to the AI narrative. The sheer size of the announced deals makes the shenanigans of Nortel Networks, WorldCom and others from the dot.com bubble look miniscule by comparison. What’s different this time you ask?
Private equity and private credit would be our answer. In a brief and brilliant article by Bloomberg’s Sridhar Natarajan and Allison McNeely, they explain that there are now 19,000 private equity funds. That’s 5,000 more PE funds than there are McDonalds.